PMI Drops off after 78% LTV??

Question

Hi BP community, I was hoping to get the answer here for this question. My lender has approved me for my loan and said I can do 15% down instead of 20% and the PMI will drop automatically after 78% LTV. My dad who has bought multiple properties says PMI does not drop unless you do a refi on the property after having enough equity in it. Thanks for the help.

Russell Brazil · Answer

You can request it be removed at 80%. By law it has to drop off at 78%. Homeowners Protection Act of 1998. FHA low down payment is currently permanent. 10% down will drop off at the same ltv as above.

Nathan Grabau · Answer

With FHA loans, you will hold PMI forever/ until you refi into a conventional at sub 80 LTV. With conventional PMI drops automatically after 78%.

You also can have PMI drop sooner if you are willing to pay for an appraisal and the new value gets the loan below 80% LTV(with a conventional loan, does not apply to FHA).

Zach Wain · Answer

What Russell said!

Devin Ryan · Answer

Just to clarify, with 10% down on FHA, it drops off after 11 years now and is no longer based on equity. The 78% LTV changed for FHA in 2013.

Neil Blalock · Answer

Thanks! I forgot to mention in the post that its a conventional loan. My dad is saying I have to pay to have it refinanced and my lender is saying it just drops off with no cost. So I just want to make sure that is certain.

Dave Skow · Answer

@Neil Blalock- in many cases on conventional loans  the PMI  will drop off  once the loan to value is < 80% of the  acquistion price ....if you want to use the  higher appraised  value - many lenders  require  2 yrs  elapse  before the  78% ltv  cna be used

PMI Drops off after 78% LTV??

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