New PMI Rate for FHA loans

13 Replies

Hi all,

For those who have not seen the news on this FHA is reducing the PMI rate from 1.35 to 0.85%! This is a significant savings and could mean the difference from cash flowing and not.

It certainly could! I was looking at FHA financing on plexes awhile back but that stupid PMI really was the nail in the coffin for me on those deals. It just didn't make sense numbers wise at the time. I'll have to start to reconsider now and perhaps I'll look again at plexes.

@Nathan Buss 

Do you know if this applies to existing mortgages or just new FHA loans?

Hey Tom, I am not 100% sure on this but I think existing mortgages will be locked in with the higher rate. Check with a FHA mortgage lender.

@Nathan Buss Thanks for the update. This could be huge for me as I'm looking to do an owner occupied FHA. Where do you normally find your info on this type of thing?

@Tom Fields

Your current PMI (private mortgage insurance) will stay the same but after January 27th you'll be able to refinance or do a streamline into today's rates and .5% less mortgage insurance.

@Jeremy Billauer

I would find a really good loan officer to help you with the pre-approval so that you know what you qualify for.

@Shaun Weekes  Thanks for reaching out. I've been talking to a good buddy of mine who works as a mortgage officer and we were going through some numbers over the last couple weeks. A lot of what we were looking at is owner occupied multi-family buildings. That being said we were never able to get down to a concrete number because a lot of it had to do with the additional income coming in. Not sure if that's the case. Is that true or should I be chatting with some other people to see if they can get me to an actual pre-approved amount?

@Jeremy Billauer  

I would have your friend start the pre-approval or pre qual depending on who he works for right away. This way you know what you qualify for and if you find the one you can execute your plan right away.

In regards to the additional income coming in I think you're talking about the rental income correct? You can use 75% of the lease agreements towards your own income. I wrote a blog about this so check it out for a more detailed answer.

Take care and good luck Sir.

@Shaun Weekes  

Cool, I'll will definitely reach out to him about that. Yes, the additional rental income. He had mentioned counting 75% of current leases towards income so I do know about that. I will definitely check out your blog!

Shaun,

Can you point me to your blog ?

@Udaya P.  

Click on my picture and then towards the bottom right you'll see blogs that the user has written.

PM me if you need more assistance. 

Added to that, 187 counties now have higher FHA loan limits now, including Dallas County, for example.

A thought I had is that these two changes will help flippers.

1. For flippers, there are more borrowers eligible to purchase at a given price. Lower MI = lower DTI = more qualified borrowers

2. The higher loan limits help those selling properties in the "added" price range. In Dallas for example, FHA now covers a $321,000 purchase (with 3.5% down through FHA) whereas FHA buyers were not eligible previously. I would expect a lot of "inflation" of homes within the $291,000 - $321,000 range.

@Jeremy Billauer  actually if you go ahead and work with someone like me (cough, cough) you can apply for a loan now but get the lowered rate so long as closing is after Jan 26th.  :) 

i'm not licensed in your state though so find a good mortgage broker or better yet, mortgage banker. 

Update to this conversion:

FHA reduced their MIP (Mortgage Insurance Premium) to become more competitive in the market as Fannie Mae reduced their down payment to 3% for conventional mortgages. FHA requires 3.5% down payment.

There are pro's and con's with both of these financing options:

FHA allows up to 6% sellers concessions and will be more aggressive with DTI's. FHA MIP is still for the life of the loan. FHA allows you to do owner occupied multi-family homes.

Conventional is only up to 3% sellers concessions, but with a better credit score PMI (Private Mortgage Insurance) could be lower than 0.85%. It all depends on your credit score. Conventional PMI can be removed once you hit 80% or below LTV. The 3% down for conventional is for single family owner occupied only.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.