FHA MIP Never goes away?

6 Replies

Hoping to get under contract on a duplex as an owner-occupied property in next couple of days. I'm using FHA so I can put 3.5% down. I thought then when I eventually have 20% of the loan payed, the MIP would be cancelled. My broker said it's a new FHA requirement that the MIP is there for the life of the loan and I'd need to refinance to get rid of it. Not a showstopper as this is probably 8-10 years down the road for a 20% position, but it is a surpise. Any thoughts?

Originally posted by @Zach Adams :

Hoping to get under contract on a duplex as an owner-occupied property in next couple of days. I'm using FHA so I can put 3.5% down. I thought then when I eventually have 20% of the loan payed, the MIP would be cancelled. My broker said it's a new FHA requirement that the MIP is there for the life of the loan and I'd need to refinance to get rid of it. Not a showstopper as this is probably 8-10 years down the road for a 20% position, but it is a surpise. Any thoughts?

That's how I understand FHA mortgages work, which is a huge disadvantage. Their PMI rates are also CRAZY high.

That's been the case for some time. Thankfully, the MIP was reduced this year from 155 bps to 105 bps. I never understand the euphoria for FHA that's espoused in the forums. Putting down the extra 1.5% to go conventional will cost more upfront, but be recovered quite quickly through lower carrying costs. Anyone looking at FHA should also look at conventional before signing the dotted line. My two cents.
Originally posted by @Dan Schwartz :
That's been the case for some time. Thankfully, the MIP was reduced this year from 155 bps to 105 bps. I never understand the euphoria for FHA that's espoused in the forums. Putting down the extra 1.5% to go conventional will cost more upfront, but be recovered quite quickly through lower carrying costs. Anyone looking at FHA should also look at conventional before signing the dotted line. My two cents.

Thanks Dan. I checked this before and FHA made more sense for my scenario, but I will definitely check conventional before I sign.

Z

@Zach Adams  Yes, the FHA MIP is for life of loan if you put the min 3.5% down. There are a few scenarios where it would go away in 11 yrs, but they are too many to list.

Have you looked into a conventional loan with just 3% for 1st time home owners? Yes, it will carry a MIP also, but the MIP is lower. And there is no 1.75% FHA funding fee.

FHA is sometimes good, sometimes bad. Your mortgage bankers should have looked at all options for you. If he/she did not then they failed at their job.

Upen Patel

Mortgage Banker

Federal NMLS# 1374243

Medium tfsb   fdic   eh   squareUpen Patel, The Federal Savings Bank | [email protected] | (571) 331‑5161 | http://thefederalsavingsbank.com/upenpatel | Lender # National Lender NMLS# 1374243

If you put down more than 10% or have a term shorter than 15 years it actually falls off in 11 years.

I know that's still nuts but if you don't have the down it a viable option.

Have a great day sir.

Shaun Weekes, Innovation Lending Solutions | [email protected] | 949‑610‑3126 | https://www.facebook.com/Innovation-Lending-Solutions-Inc-261955880814516/ | CA Agent # 0L51686

Originally posted by @Shaun Weekes :

If you put down more than 10% or have a term shorter than 15 years it actually falls off in 11 years.

I know that's still nuts but if you don't have the down it a viable option.

Have a great day sir.

 Thanks Shaun.  I don't have the down.  Going with 3.5%