Thanks for the response so far.
Here is an update.
I physically met with the WaMu loan officer (armed with W2's ect) and she gave be a better/different explanation. When we spoke on the phone the other day, it was not in reference to PMI, but to just qualifying for a jumbo loan.
Apparently, our local county in NCal was down graded to a "D" (A is the best risk, and E is the highest risk), so in order to qualify for a jumbo loan -- which is basically everyone here in NCal -- you must have 25% down. This is because the bank is assuming that home prices are going to keep going down.
We are going to get pre-approved regardless due to our good credit, but I am in the process of talking to other mortgage brokers to see if this is specific to Wamu.
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