House Hack without PMI?

2 Replies

Hi Everyone,

I'm in the process of making an offer on a duplex to house hack. I'm looking into a couple different financing options, including partial seller financing or just a straight up FHA loan. I was thinking that if I do part FHA (or would it be considered a conventional loan at that point?) and part seller financing, then I wouldn't be required to pay PMI. However, my lender is telling me that PMI is unavoidable. Is there anyone who can maybe explain this to me or give me some example scenarios on how this could play out?

The numbers still work on this property with or without PMI but if it's possible to save on that expense, then why not.

Two of the simpler ways to get out of PMI:

1. Put down 20%

2. Get LPMI and take a higher rate in exchange for no PMI.

3. Piggyback loan.

Option #2 is tricky because at some point, you'll be paying more for the loan than if you had originally taken PMI. With that being said, I haven't heard of doing a deal with part seller financing and part FHA. Try talking to more than one lender to see if there are any other alternatives that may be available to you.

PMI will be there unless you put down 20%, even if it's conventional. Another way to get rid of PMI but not right away is to remodel the home to increase the value and then refinance.