Any way around PMI?

4 Replies

Hey everyone I am just starting out and I've been searching for a multi family. But I don't have enough money saved up to put 20% down. Which means I have to pay PMI. Does anyone know away around this? Help would be greatly appreciated.

Thanks Chris Verissimo

Unless you use a VA loan and than there is a funding fee. I like conventional because the funding fee drops off when you reach 78% LTV. I truly don't mind the funding fee. I feel like it is small price to use someone else's cash.

If under 20% down there will likely be PMI but you do not have to go the more common rout of FHA putting 3.5% down. Speak with a lender but as short as a last march you could put 5% down conventionally and reduce the PMI in more then half. For me it was the difference of just under $300 extra/month with FHA slashed down to a about $125 conventionally/month. Also with the FHA PMI does not go away until you refi out, conventional it goes away once you pay a certain amount.

Additionally I have heard of some banks offering classes on money management that can reduce and/or remove PMI. This is just word of month, I do not have any definitive confirmation.

@Christopher Verissimo  

It use to be that you could eliminate PMI by doing 2 mortgages. An 80% first, your down payment and the balance in a second. It used to be called an 80/15/5 or an 80/20/0. They may not do these since the housing crisis but things are loosening up so I am sure something like this will be available again; especially if you have good credit.

Thank you everyone great tips. I'll be sure to look into that!

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