Boston, MA · Member since 2014 · 14 posts · 2 votes
Hey every one. I'm starting to look at properties mostly multi familys in the Boston area and I was wondering if FHA loans are the best for first time home buyers that don't have a ton of money save up? If any one could get back to me that would be awesome!
There are ups and downs to each type of loan. FHA is a low down payment, but a hefty PMI penalty. The FHA loan is also a tough sled with it's paperwork and requirements. You can shift though lots of info here on BP for most types of loans.
Here are the cheapest housing options I'm aware of in the US. Please take a deep look at each one for details:
There are ups and downs to each type of loan. FHA is a low down payment, but a hefty PMI penalty. The FHA loan is also a tough sled with it's paperwork and requirements. You can shift though lots of info here on BP for most types of loans.
Here are the cheapest housing options I'm aware of in the US. Please take a deep look at each one for details:
Real Estate Broker · Mount Olive, IL · Member since 2013 · 1k+ posts · 310 votes
12y
Welcome to BP.
It depends on how much funds you have. If you have sufficient funds to cover 20% down, you will get the best rate fixed for 30 years (4 units or less). However, if you are short of funds, FHA is 3.5% down is probably your other best option because you could buy more properties by putting less down. Yes, you will have to pay PMI if putting less than 20%.
Any time the LTV (Loan-To-Value) on a mortgage is higher than 80% (less than 20% down payment), the lender will require the mortgage to be insured. This is because it's more risky for them because YOU have less skin in the game and are more likely to skip out on the payments statistically.
Best I've seen is a low down payment with no PMI ( I think they're discontinuing the Mass Housing Low down No PMI soon, if not already) FHA PMI is tough 1.75% Up Front and 1.35 monthly;-( but it's also important to move into a 3-4 family, Improve a unit and move into another, etc You know "sweat equity" thang.
Is your wife/girlfriend going to be on the note and deed? It may help your Relationship, Downpayment and Income qualification;-)
Investor · Nashville, TN · Member since 2014 · 104 posts · 15 votes
12y
@ Christopher Verissimo Welcome to BP.
PMI does not have to be permanent. I bought a home with 10% down and through principal pay down and appreciation my equity increased and I was able to have the PMI removed , but I had to request it.
Rental Property Investor · Brookline, MA · Member since 2013 · 1k+ posts · 777 votes
12y
@Anne Wallace - A conventional loan generally will drop the PMI when the LTV reaches 80%. The catch here is that you need to pay for a reappraisal if you think your sweat and blood have built up enough equity to qualify. Otherwise most drop when you've repaid 20% of your loan.
The PMI on the FHA loans is permanent for any loan that starts with an LTV under 90%. FHA PMI