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First Time Home Buyers - Down Payment, PMI and Points
The question Why would refinancing my mortgage increase my PMI, even though rates are lower? contains a decent discussion of PMI. It's based on the total amount you borrow, not just the difference to 80% LTV.  For easy math, Say you put 15% down on a $100K house. Your PMI is 1.1%, not on the 'missing' $5000, but on the $85000 balance. So you are paying $935/yr extra due to the $5000 you didn't have available. In addition to the mortgage itself. Even at 90% LTV, you'd pay $990/yr for the fact that you are short $10,000.  Other than this discussion of PMI calculations, Chad's answer is pretty thorough.