My daughter's looking at buying a house in Denver this fall. I'm gifting her $13K + another $13K from my mom. My daughter will come to the table with ~$5600 (3% of purchase price).

I told my daughter to structure the sale so that the seller picked up all closing costs.

That would put my daughter just a bit short of 20% down on the house. Since 20% down gets rid of PMI, I'd like to have her take a small second mortgage. ... the mortgage broker stated that 15+% down qualifies for lower PMI but I'd rather just have her take out a loan for 80% of home value.

Does anyone have any recommendations on how to fund ~$6K for a second mortgage? HELOC? Personal loan? I'd like to have her get something that doesn't cost a lot in origination fees.

Thanks in advance.

Check into buying out the PMI premium. With a high credit score, it might not be too much, point-wise, to buy it out. I don't know what the buyout would be on an 85% LTV loan, but ask your lender. Then you can compare that to what originating a second mortgage + paying the interest on it would be. It may or may not be competitive with other solutions, but it's one I didn't know about before we went house shopping late last year.

Is she in a position to do an FHA 15-year? I think - but am not sure - that I heard those don't have PMI.

Good luck.

Annual MIP on FHA 15 year loans with LTVs 90% and below is .35%. LTVs above 90% on 15 years loans is .60%. There is no annual MIP on LTVs that are 78% and below. However, the upfront premium is 1.75% regardless of term or LTV.

I agree with Dan. Buyout the MIP with a one time upfront premium. Bump the rate a little, and have the lender pay or provide a credit to cover the cost.

I structure all my high LTV conventional loans this way.

If your daughter is going FHA, go with 3.5 to 5% down and have lender and seller pay costs.

Wait and save and get the 20% down, or make a lessor offer that puts the loan at 80% ltv or find a little less expensive house. She's 6k away from being at 80% ltv? She can wait. Hell by this fall houses she likes will be selling for 6k less than they are now, wait until after kids go back to school and offers dry up then come in with a low ball offer.

The one time buyout of PMI is .99%. Not worth it, IMHO.

My daughter is going to look at slightly lower priced properties. If there's still a gap, I plan on gifting money to my son and having him gift the money to my daughter.