FHA PMI

[Brandon Crumpton]

I'm looking to buy a triplex with FHA loan. Is there any way I can get a lower PMI or find a FHA lender who has lower PMI rates ?

[Joel Owens]

If you are going FHA you will be living in one of the units.

Years ago FHA was the main lender. Then conventional came in with 80/20 loans for 100% down and took a bath being upside down on properties. FHA swooped in for only 3% down.

Then FHA took a beating on losses. How they have developed a plan to recover is to charge outrageous mortgage insurance rates that they keep increasing every few months. It's not to pay for losses today but to shore up the sins of their past. Also you cannot get rid of the mortgage insurance and it stays with you the life of the loan now.

So if you don't want high mortgage insurance and no chance of dropping MI then you need to go conventional. Conventional will want a higher credit score and more money down. With FHA you can get the full down payment as a gift from family etc.

With conventional say you put 10% down 5% of that can be a gift and the rest is from you. It can't all be a gift. No MI is for 20% down or greater. With conventional the more you put down 5,10,15 % the less the MI is. The credit score requirement drops with more down. Can't have that cake and eat it to.

No legal advice.