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fha loan mortgage insurance

what is the minimum possible time in which i have to pay mortgage insurance on an FHA mortgage with the lowest possible down payment? i.e. whens the soonest i can cancel mortgage insurance? Also, more of an opinion based question, are conventional loans cheaper all things (mortgage insurance) considered? by HFinn_711_190 from Ballwin, Missouri. Aug 17th 2012 Reply


William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

FHA requires that you pay mortgage insurance for a minimum of 5 years. After 5 years, once you reach 78% of the original loan amount, then it's supposed to drop off. ($100K original loan, $78K balance). FHA has some small print in their paperwork that says they don't have to drop the MI if they feel the value is not sufficient.. so it's not automatic... I have borrowers who have been fighting with FHA where they have loans that are 8 years old and they are way below the 78% and FHA won't drop the MI.. With FHA it's based on original loan amount not current value. Conventional loans will allow the MI to drop if you can prove your balance is 80% or less than the value of the property.. They will make you get an appraisal, but you can drop it any time you have 20% or more equity.. in the long run Conventional financing is cheaper, but it will most always require a higher down payment, so it's really what works with your budget.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Aug 17th 2012
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Cody Bellah (cody@communitymortgagekc.com)
#17 ranked lender in Missouri - 71 contributions

After 5 years on a FHA loan if you are below 78% loan to value on your home you will not have it anymore with proof of an appraisal. It dosent matter how much you put for a down payment as long as you meet the 3.5% down you will have it. Even if you put 50% down. Now on a 15 year loan you will not have it under 89.99%. As far as the Conventional vs FHA will depend on a # of things. Loam to Value, Credit score....etc.If you would like you can call me for a free consultation and I can get you going in the right direction....816-256-0013. Cody Bellah

Aug 17th 2012
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For a 30 year FHA loan you must keep the mortgage insurance for 5 years. With a 15 year FHA loan it drops automatically once your balance reaches 78% of the original sales price or appraised value, whichever is lower. This typically takes a little over 3 years. There are many factors which go into comparing FHA vs Conventional. Your conventional loan payment and resulting PMI are products of your credit scores, loan amount, Loan to Value, debt ratio's etc. So, cheaper? Not necessarily but could be if all other factors line up in your favor. Typically, FHA interest rates are a bit better than conventional.

Aug 17th 2012
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FHA requires MI on 15 year loans unless you begin your loan at or below 78% not 89.99%. The monthly factor is .60. MIke--816-554-5601

Aug 17th 2012
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Peter Botros (PeterBotros)
#70 ranked lender in New York - 895 contributions

If you are able to put 20% down conventional loans will be cheaper over the life of the loan. FHA will require a minimum of 5 years of Mortgage insurance and 22% equity.

Aug 17th 2012
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