On Your Lot builder-Big house, less payment

If you have been looking into the purchase of a new or larger home, then you have likely heard of PMI or Private Mortgage Insurance. What is it - and the bigger question - how can you avoid paying it?
What Is PMI?
PMI is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home's value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI. How much extra will this insurance cost each month? You’ll need a masters degree in mathematics to figure that out, but basically, it's around $72-200 each month on a $300,000 loan!
How do I avoid paying PMI?
Let’s face it - if you're given the option of 1) owning a larger house with 20 percent equity thus avoiding PMI or 2) having a smaller home with 5 percent equity, but stuck paying PMI, which would you take? Silly, right?! Think about this though: if you can borrow $220,000 for a new home but could avoid the PMI because the new home you build could have over 20 percent equity, you could actually afford $20-25,000 more for the same monthly payment and have 500 square feet more, would you do that? Very silly, right?!!
It’s your choice: 1) buy a 1,500 square foot home with no equity and pay $150 dollars a month for PMI or 2) build a 2,000 square foot home for the same monthly payment, no PMI, and have 500 square foot more. Five hundred square feet is the equivalent to having five more 100 square feet bedrooms or a BIG MEDIA room for next year's Super Bowl where the Seahawks will win it all and…. Ok, I lost my train of thought there. Buy the bigger house. That is not silly, just smart.