25% down from grant need pmi?

That doesn't sound right. But, you've indicated you got that information from a bank loan officer. Bank loan officers generally speaking are unlicensed, and should be considered simply an application clerk with limited knowledge. You should speak to a local, fully licensed, tested, professional Loan Officer for a correct answer. Here is a good article to determine if your loan officer is licensed: http://joemetzler.com/lendershopping.htm

Good answers here, find another lender.

Would need additional details to give you the most accurate information. Fannie Mae guidlines would not require you to have mi with a ltv of 80% or less. The issue may be where the down payment, gift funds, are comming from. If they are from an approved/accepted source you should be ok but if the funds are from the builder then that is why you would be required to have at least 5% of your own fund in the deal.

You most likely will not need mortgage insurance as long as you have 20% down. I completed a transaction just like this last month.

I agree with Mr. Metzler - bail on working with Wells Fargo at all costs. Per Fannie Mae's guides:Down Payment and Qualifying Ratio RequirementsWhen the guarantor's, co-signer's, or non-occupant co-borrower's income is used for qualifyingpurposes, the occupying borrower(s) must make the first 5% of the down payment from theirown funds unless:o the LTV or CLTV ratio is less than or equal to 80%; oro the occupying borrower is purchasing a one-unit principal residence and meets therequirements to use gifts, donated grant funds, or funds received from an employer to payfor some or all of the borrower's minimum contribution. See B3-4.3-04, Personal Gifts;Based off of this information - if the grant is allowable in Fannie's eys - you should not have to come up with 5% of your own funds.

Being in CA I am not familiar with this grant program but what everyone says sounds correct. Conventional rules will allow for a 20% down gift or higher and there is no PMI on that transaction and that is basically what is happening. What the others are saying about Wells is true, they are order takers but I am guessing they know their own programs and if you have no money down yourself it is possible PMI is needed. FHA requires monthly mortgage insurance for a minimum of 5 years no matter how much you put down if you have a 30 year loan but this does not sound like FHA because they gave you a way out. Strange. Do us a favor and since you have so many professionals willing to reach out and help, can you report back here and tells the outcome?

This is not the first time I have heard this, and I do believe your mistake was going to Wells. Federal Law requires a lender to cancel MI once the Loan to Value is at 78%, (80% if requested by the borrower and the account is in good standing). My advice is to contact a local Mortgage Banker/Broker, rather than one of the big banks or big national mortgage factories. Unlike a bank employee, who is most likely just an order taker, a Mortgage Broker/Banker is Trained, Tested and Licensed in all aspects of Mortgage Origination. He/She will have access to loan products of many lenders, not just those of one bank, and can properly guide you. But more importantly, He/She is trained to take a look at the various different options available to you and guide you into the one that makes the best sense for your situation. Don't forget to check out your selected Mortgage Originator at the National Mortgage Licensing System at www.NMLSConsumerAccess.org ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com