Removing the PMI on FHA loan once you have.........

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Removing the PMI on FHA loan once you have.........

Michael Dunn
Olive Branch, MS · Member since 2013 · 452 posts · 10 votes

I was wondering please, 

Can you have the PMI removed from your FHA loan , SO LONG AS you have " Less Than " 80% LTV on your Primary Residence ( so a LTV of 79%, 78%, 77% , etc. ) ?

And do you have to have owned your Primary Residence for a specific number of years , before the PMI can be removed, EVEN IF you have " Less Than " 80% LTV on your Primary Residence ( so a LTV of 79%, 78%, 77% , etc. ) ?

Thanks so much for the help 

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Jeff B.
Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
9y

Read the fine print on the mortgage doc - - some loans now have PMI forever.

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  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y

    Read the fine print on the mortgage doc - - some loans now have PMI forever.

    3Reply
  • Lynn McGeein
    Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
    9y

    I believe FHA loans after a certain date in 2012 or 2013 have no MIP removal mechanism, it stays for the life of the loan, so you'd need to read your loan docs. My last FHA was in April of 2012, and I believe it was balance due below 80% of appraisal or purchase price, whichever was lower, and minimum 5 years?, but I'm not sure on the year requirement. You can have it removed by refinancing to another product, so maybe look for a low-cost refi option.

    0Reply
  • Shaun Weekes
    Loan Officer / Processor / Life & Health Agent · Rancho Cucamonga, CA · Member since 2014 · 1k+ posts · 757 votes
    9y
    Originally posted by @Michael Dunn:

    I was wondering please, 

    Can you have the PMI removed from your FHA loan , SO LONG AS you have " Less Than " 80% LTV on your Primary Residence ( so a LTV of 79%, 78%, 77% , etc. ) ?

    And do you have to have owned your Primary Residence for a specific number of years , before the PMI can be removed, EVEN IF you have " Less Than " 80% LTV on your Primary Residence ( so a LTV of 79%, 78%, 77% , etc. ) ?

    Thanks so much for the help 

    If this is a new loan the only way PMI will fall off is if you put down 10% or more or is the loan is a 15 year fixed or lower. In those 2 cases the PMI will fall off in 11 years.

    Otherwise the PMI will be there forever.

    0Reply
  • Harjeet BhattiPro Member
    Lender · Glenview IL- CDLP NMLS#230554 · Member since 2015 · 2k+ posts · 747 votes
    9y
    • For all mortgages regardless of their amortization terms, any mortgage involving an original principal obligation (excluding financed Up-Front MIP (UFMIP)) less than or equal to 90 percent LTV, the annual MIP will be assessed until the end of the mortgage term or for the first 11 years of the mortgage term, whichever occurs first.
    •  For any mortgage involving an original principal obligation (excluding financed UFMIP) with an LTV greater than 90 percent, FHA will assess the annual MIP until the end of the mortgage term or for the first 30 years of the term, whichever occurs first.
    0Reply
  • Daria B.
    Rental Property Investor · Gainesville, FL · Member since 2015 · 1k+ posts · 432 votes
    9y

    If it's a new loan how about an 80/20 or whatever combo to avoid the PMI? That's horrible that it now stays forever.

    0Reply
  • Michael Dunn
    OP
    Olive Branch, MS · Member since 2013 · 452 posts · 10 votes
    9y

    I got mine in 2016 

    So it looks like I'll have the PMI for the Entire loan ( unless of course I Refi. out of the FHA loan )

    0Reply
  • David Faulkner
    Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    9y

    It is not a separate PMI on a FHA loan per se. The PMI is essentially built directly into the loan in the form of a higher interest rate. So, no, you can never get rid of it ... only way is to refinance out of FHA, but that may be at a higher interest rate in the future. Better IMO to put 5% down on a conventional low money down loan with PMI ... at least then you can appraise out of it when you have the equity and keep your low interest rate without the need to refi. That and the inspections on conventional loan purchases are much less strict, allowing you to buy a fixer that is a great deal but that would never be allowed with the stricter FHA inspections.

    0Reply
  • Michael Dunn
    OP
    Olive Branch, MS · Member since 2013 · 452 posts · 10 votes
    9y

    David Faulkner , 

    Thank you for the great advice

    What Lenders specifically offer 5% down on a Conventional Loan ?

    I am assuming this is a different program than FHA loan ?

    And with the 5% down on a a Conventional Loan...... is there a way to get financing for the Repairs as well ?

    Thank you so much 

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    9y
    Originally posted by @Michael Dunn:

    David Faulkner , 

    Thank you for the great advice

    What Lenders specifically offer 5% down on a Conventional Loan ?

    I am assuming this is a different program than FHA loan ?

    And with the 5% down on a a Conventional Loan...... is there a way to get financing for the Repairs as well ?

    Thank you so much 

     Any mortgage broker can get you into a 5% conventional. Most can also get you into a 3% conventional loan. That is the Fannie Mae Home Ready loan.

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    1Reply
  • Michael Dunn
    OP
    Olive Branch, MS · Member since 2013 · 452 posts · 10 votes
    9y

    Russell Brazil ,

    does the 5% down on a Conventional ........ Would I be able to get financing for any Repairs with this type of loan ( 5% down ) ?

    Thanks so much 

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    9y
    Originally posted by @Michael Dunn:

    Russell Brazil ,

    does the 5% down on a Conventional ........ Would I be able to get financing for any Repairs with this type of loan ( 5% down ) ?

    Thanks so much 

    You would need a renovation loan for that. FHA 203k (still permanent PMI) or the Fannie Mae Home Style loan. Im not sure what the details with Home Style are...but @Chris Mason probably knows.

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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    9y

    Hi @Michael Dunn,

    Yup, you can do 95% LTV on FNMA HomeStyle like @Russell Brazil suspected but didn't want to say. 

    0Reply
  • Michael Dunn
    OP
    Olive Branch, MS · Member since 2013 · 452 posts · 10 votes
    9y

    Chris Mason , 

    Just want to make sure I fully understand the Fannie Mae Home Style loan ........ With this loan ...... Can you get the Repairs financed into this loan ?

    Thank you again 

    0Reply
  • Michael Dunn
    OP
    Olive Branch, MS · Member since 2013 · 452 posts · 10 votes
    9y

    Chris Mason  and  Russell Brazil  ,

    I just read through some of the Guidelines regarding the HomeStyle® Renovation Mortgage ,

    It shows that you can use this Loan for Investment Properties ( at a 85% LTV )

    And it also states that there's a   Borrower “Do-ItYourself” Work (  Borrowers can perform the renovation work themselves at the lender’s discretion, provided that:  The Do-It-Yourself financing does not exceed 10% of the as-completed value. Note: Inspections are required for all work items that cost more than $5,000.  The property is a one-unit owner-occupied home.  The reimbursement is limited to the cost of materials or the cost of properly documented contract labor (sweat equity may not be reimbursed). )

    So if the ARV is $120,000 , does this mean that you can ONLY borrow a MAX of $12,000 ( 10% of the $120,000 ARV ) to use for the Materials to repair and renovate the Property..... and you do the Work yourself ....aka FREE Sweat Equity on your part ?

    0Reply
  • Carrianne Mucho
    Lender · Roseville, CA · Member since 2011 · 205 posts · 86 votes
    9y
    Michael Dunn The homestyle loan is not really designed for do-it-yourselfers. The renovation budget can be up to 50% ARV if you use a contractor. So, the diy could be a portion of that. Works well on a rehab or remodel when you have a contractor do most of the work but maybe you want to save a little by doing the painting and trim work or install fixtures yourself. As a renovation lender, I suspect the main reasoning behind limiting renovation financing to contractor work is that the bank is more comfortable lending on a property that is more likely to have work done to professional standards and because there is a limit on the time you have to complete the project. Contractors are more likely to finish within that timeline so they can get paid. DIY is less motivated and the bank could end up with an unmarketable, partially completed project.
    0Reply
  • Michael Dunn
    OP
    Olive Branch, MS · Member since 2013 · 452 posts · 10 votes
    9y

    Carrianne Mucho , 

    Thank you very much for your reply 

    I myself , as well as my father ( who would be helping me on all of the Repair / Renovation work ) are both Contractors by trade....... Him 30+ years and Me 9+ years 

    Given this , what would he and I need to Show as proof to Lenders who use the HomeStyle Loan , that we are Both Able and Capable of completing any and all home Remodel and Repair work ?

    And also, Given are Extensive years in the Contractor business....... Do you think we have a good chance of being allowed to do a good amount of the work that may be needed on a typical Renovation Project...... Replacing the Decking and felt the Roof, Lay all of the Flooring, Install all Cabinets,countertops,sinks, lighting,fans  , Paint the House inside and out , Replace all the Rotten wood ( inside and out ) ?  The Only thing I can see me wanting to hire out , would be to have the house Shingled...... Other than that, I'd like for he and I to be able to do the rest of the work , so long as we assure the Lender we will stay on Budget and on Their set time schedule, for when to have the work completed.

    My Hope and thinking is, by doing the Work ourselves, is that I can get the House for a cheaper price, as paying for Labor can really add up to the Overall cost

    Thank you so much for all of your time and help 

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