2-4 unit 95% LTV with no PMI

14 Replies

Hello,

I am having trouble locating a lender that can do a 2-4 unit 95% LTV loan with no PMI in Illinois. Does anyone have any referrals?

Best,
Jerry

curious how you'll pull that off unless it's owner occupied. 

I think you are looking for Bigfoot here. He may not exist.

PMI kicks in when you owe more than 80% of the value of the property. Therefore, if you borrow 95% you will owe more than 80% and PMI will kick in.

Also, I am not aware of any loans from a bank that will loan 95% on an investment property. Most always want 20-25% down.

You can avoid the 20-25% down by buying as an owner occupant through a first time home buyers loan or a FHA loan. However, that pesky PMI will show back up.

The only situation that I am aware of would be a VA loan on an owner occupied property. You can then finance 100% of the property and there is no PMI with a VA loan. However, two things are required:

1. You must be a veteran.

2. You must reside at the property.

Originally posted by @Gerardo Garza :

Yes owner occupied!

You can achieve the down payment of 3.5 with an FHA loan but you will not be able to avoid PMI unless you are a veteran.

By no PMI I mean LPMI, lender paid mortgage insurance. It's hard to find!

One of the few programs that you can get 95% LTV on a 2-4 unit owner occupied property is the Freddie Mac Home Possible loan.

i would look into the pricing difference between LPMI and lump sum MI. You can pay the MI lump sum, and have no MI Factor in your monthly payment. Compare that to the LPMI at a higher interest rate or the standard MI on a loan.

If you keep the down at 5% and are doing a conventional loan, you can also look at a split MI. so part of the overall MI premium paid as closing costs and part as a multiplier of your monthly payment. This typically gets you a lower payment then just having the standard MI. And you can get the seller to help pay your closing costs, thereby paying some or all your upfront MI Premium. Pretty cool!!!

Updated 11 months ago

By lump sum MI, I mean Single Premium MI.

Thanks, Kevin. I was told by one of my lenders that we couldn't do a Freddie Mac Possible loan with LPMI. What do you think the is disconnect?

@Gerardo Garza yes, LPMI is harder to find than you think. You would think that every lender would offer it but that is not the case. Call around a little more or maybe even work with a mortgage broker - that's someone that represents many different lenders. Just in case, the PMI rate on a Home Possible is about 1/2 the normal PMI rate. I might get numbers for both scenarios just to see the difference. It might not be as bad as you think. Good luck!

I'm seeing conflicting reports on that? It looks like its a case by case based on the MI company and it could also be the lenders overlays as well? It is possible, you just may need your lender to shop MI companies or in the worse case scenario, you may need to shop the lender?

You can purchase under home possible. 

When we first house hacked a 3 family we did an FHA loan wth 3.5% down plus a 203K for rehab - Fast forward a year and we refinanced out to a conventional with no MI.

If you can find a project and are willing to put in work in time you can build in equity. Sucks to pay MI but in the end it worked out very well for us.

@Gerardo Garza this is a lender overlay.  I would reach out to a broker in your area to shop this around for you.  You should be able to find 5% down with a lender paid MI option.

Loan Depot does conventional loans with 5% down and no PMI. The interest is a bit higher but only by about .75% per month. There are likely other direct lenders (rather than brokers) that allow this. It’s only for owner occupants.

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