FHA 203k Loan question

6 Replies

You can refi an FHA loan into a conventional. On my second house hack here in Los Angeles I went from an FHA 203(k) to a streamline FHA refinance and then went conventional. In terms of getting a higher LTV, it would just depend on the equity. When I did a HELOC on my first house hack, I was able to pull out up to 85% LTV. Keep in mind in all of these scenarios it was owner occupied.

So basically refinancing from an owner-occupied loan to another owner-occupied loan (conventional), giving me the ability to eliminate PMI once I reach 22% equity + capture more equity from the cash out refinance. I'd also have a lower interest rate since it's owner-occupied. What made you want to refinance to a streamline FHA before Conventional? Also, was your conventional an owner occupied loan or investment? @Rick Albert

Hey Jerome,

A couple of things.

1. It is 20% equity, not 22%.

2. Everything else you said makes sense.

3. I went streamline because I added an ADU and there were no comps at the time so I knew it wouldn't appraise. Even though it was still FHA, it dropped my mortgage payments down by about $300 a month.


Hope this helps!

Originally posted by @Rick Albert :

Hey Jerome,

A couple of things.

1. It is 20% equity, not 22%.

2. Everything else you said makes sense.

3. I went streamline because I added an ADU and there were no comps at the time so I knew it wouldn't appraise. Even though it was still FHA, it dropped my mortgage payments down by about $300 a month.


Hope this helps!

It is my belief PMI on FHA is for 11 years on recent loans (not based on equity) that were initially 90% LTV or lower. If LTV was greater than 90% LTV, PMI is life of loan.

Fha used to drop PMI at 78% LTV, but no longer has this option on recent loans.

If you have over 80% LTV, you can refinance from FHA to avoid PMI.

@Dan Heuschele

I would double check because I have always been told that the mortgage insurance for FHA is for the life of the loan. The only way out of it is through refinancing or paying it off.

@Jerome Morelos short answer, yes you can.

Are we talking about a 1-unit property, or a 2-4 unit?

Conventional max LTV's: 1-unit 95%, 2-unit 85%, 3-4 unit 80%.

So if this is a 3-4 unit, you would need to be at 80% LTV and there wouldn't be PMI.

Also if your income is below the income cap for the program, Conventional Home Possible is coming back on 11/15, which allows up to 95% LTV for a 2-4 unit.

Check with your loan officer on your options.

Hope that helps, best of luck!