This may not have been the best way to do it, but it worked out for me. I took an FHA mortgage, with a very small downpayment and PMI. 3 years later rates had gone down, and my house had gone up enough in value that I was able to refinance with Wachovia at a lower rate and stop paying PMI. The value of my house had gone up enough to get me close to the 20% equity threshold. Close enough that Wachovia didn’t hit me with PMI.