6 Don'ts When Buying Your First Home (Part 3 of 6)

Don't forget about PMI when calculating your monthly expenses

The idea of putting as little down as possible on your new home is attractive, especially if you're not a natural saver. Today, that can mean just three percent of your purchase price, depending on the loan. For FHA loans, it's three and one-half percent. The problem with making the minimum down payment is that you then have to pay Private Mortgage Insurance (PMI).

"PMI is a fee you pay on your mortgage until you owe 80 percent or less of what your home is worth. It's one reason why so many experts advise homebuyers make a 20 percent down payment; if you do, you avoid the evils of paying PMI," said Student Loan Hero. "PMI can cost between 0.3 percent and 1.15 percent of your loan annually. Depending on how much you borrow, that can mean thousands of dollars in extra costs until you can cancel your PMI."