3.5% Down Payment Mortgage Insurance

[Elin Trinh]

Hi!  Several times in the BP podcasts they talk about putting down a 3.5% down payment.   When I run the numbers for a property and enter a 3.5% down payment it adds a mortgage insurance fee.  They don't talk about mortgage insurance when they talk about 3.5% down payments in the podcasts.  Is there a way to put down 3.5% and not pay mortgage insurance?  Thank you in advance for your help.

[Sasha Mohammed]

you can try to squeeze into conventional 3% down, and then do LPMI instead of BPMI. the rate will jack up probably reeeeeally high, but it will FEEL like you're not paying mortgage insurance. 

LPMI = lender paid mortgage insurance
BPMI = borrower paid mortgage insurance

this is better than FHA as well because FHA tacks on an up-front MIP as well as the monthly, whereas conventional MIP is only monthly.

honestly though, i highly recoomend ponying up a little more cash and going conventional 5% down if that's an option. not much more up-front, but a significantly better loan.