Homebuyers can skirt the need for private mortgage insurance by securing a second loan - either from the seller or from another lender.

Though lender requirements differ, buyers usually can combine a 10-percent down payment of their own with a 10-percent second loan from the seller. However, Fannie Mae and Freddie Mac lenders typically require a 10-percent down payment and a 15-percent second loan from the seller, or 15 percent down and a second mortgage for 10 percent of the purchase price.

Because lenders are not likely to offer a second mortgage at a competitive interest rate, an even better alternative for buyers is to try to come up with a 20-percent down payment by borrowing money from a relative or employer or by selling assets.

How Can You Avoid Private Mortgage Insurance on a Home Loan?, Inman News Features Online (04/10/02). Abstracts Copyright © 2002; Information Inc., Bethesda, Md.