Forgotten Your Password?

Need to Register?

Question Icon

How much down payment do I need on a 345k loan to avoid PMI? Also how much do I need to have in the bank for reserve?

by lynette195 from Arvada, Colorado. Jan 22nd 2016 Reply


Well there are a few ways to avoid PMI. Typically to abide PMI you will need 20% down so in this situation $69,000, however you have a few other options as well. You can put down the minimum down payment and them pay the pmi premium up front, you can also put into taking a slightly higher rate to avoid PMI. If you'd like you can contact me and I can go over all the options with you allowing you to see which one will best fit your financial situation. As far as reserves that will vary depending on the lender but we typically like to see at least 3 months in reserves which can be in the form of retirement funds like your 401k.

Jan 22nd 2016
1
0
Tim Day (tday@tldfinancial.com)
#1026 ranked lender in California - 4 contributions

I assume you mean a purchase price of 345k. Generally anything less than 20% down will require some kind of PMI. Depending on your credit score, you may qualify for 3% down, which is $10,350 plus closing costs. The PMI in this scenario cancels when the loan reaches 80% of value. Our PMI rates are cheaper than most. Another option is to pay a slightly higher interest rate to make up the PMI amount. These are your best options. Contact me for details.

Jan 22nd 2016
1
0

Generally speaking, there are only two TRUE ways to avoid paying "PMI" in any form; 1) 20% down on a conventional loan. 2) Being an honorably discharged Veteran with a minimum 10% service related disability. Any other scenario will result in the consumer paying PMI in one form or another, whether the Lender/Broker discloses it or not. You may pay it in a higher interest rate than you would get if you belong to one of the two groups mentioned above , or paying it with a "front end" fee that adds to your closing costs.

Jan 22nd 2016
1
0
Sean Young (SeanYoung)
#2 ranked lender in Colorado - 1,106 contributions

Hi Lynette, without doing a 20% down payment you have a few options on a conventional loan. Depending on your credit and overall eligibility you can buy out of mortgage insurance (MI) as a onetime fee paid at closing. The cost to buy out of the MI depends on your credit score, debt to income ratio, property type, occupancy type, loan to value and insurance company. The higher the down payment the lower the cost to buy out of MI will be, the higher your credit score the cost to buy out of MI can go down as well. You can also do what is called Lender Paid Mortgage Insurance (LPMI). Doing this will result in a higher interest rate, but the overall monthly payment is usually less even with the higher rate because you don't have any MI. The best thing you can do is to have a loan officer (like myself) show you the cost vs benefit of each to see what option is best for you. I am available this weekend if you have time to talk, text or email. 303-521-7169 / sean.young@nafinc.com / Sean Young

Jan 22nd 2016
1
0
Jason Berman (jason@jbermangroup.com)
#102 ranked lender in Colorado - 25 contributions

Hi Lynette, the answer is $60,000. Reserves are minimal. Generally if you have $60k to put down, reserve requirements aren't an issue. Do a no-cost loan if you are concerned about reserve requirement. Actually you should do a no-cost loan regardless of what type of loan & how much you put down. Be happy to explain why, feel free to give me a call at 970.455.4131 or 303.204.8600. Cheers, Jason Bermanp.s. I'd avoid the LPMI product that some of the other mortgage originators posting here are suggesting. Basically you pay all your mortgage insurance upfront to get a discount. It's a losing bet & I'll be happy to show you how, when we connect. Have a good weekend!

Jan 22nd 2016
1
0
Jason Berman (jason@jbermangroup.com)
#102 ranked lender in Colorado - 25 contributions

Ha! whoops...typo...should be $69,000k. Fat fingers. Just wanted to correct FTR. Cheers, JB

Jan 22nd 2016
1
0
Sean Young (SeanYoung)
#2 ranked lender in Colorado - 1,106 contributions

I forgot to mention you can get out of MI with as little as a 3% down payment through Fannie Mae's HomeReady program. If you don't qualify for HomeReady you can buy out of MI with as little as a 5% down payment. You also have the options of doing a first and second mortgage, doing a 1st mortgage to 75% loan to value and a second mortgage at 15% for a total of 90% LTV with a 10% down payment. At 75% you will get great pricing. Of course this all depends on your overall credit and income qualifications. Reserves vary depending on the type of transaction, occupancy, amortization, number of units and number of other financed properties you currently own, if any. Once your loan is run through Desktop Underwriting you will know for sure how many months of reserves are needed, if any.

Jan 22nd 2016
1
0
Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,224 contributions

Good answers previously and a good mortgage lender will look at your situation and suggest options that include what has been suggested. As for reserves, for a strong buyer I often find that only minimal reserves are required not or at all, however they do strengthen the application and make for an easier approval.

Jan 23rd 2016
1
0
William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,795 contributions

Lending guidelines require 20% down to avoid paying PMI.. so $69,000. However, there are options to where the MI can be "Lender Paid" but make no mistake, it's YOU paying.. Lender paid PMI is when the lender raises the interest rate on the loan and with the added income from the higher rate, they pay the MI for you.. This type of PMI is non-cancelable and non refundable. It's there for the life of the loan. There are also upfront PMI options where you pay a one time fee and then there is no monthly MI.. but again, YOU pay it, and it's non refundable/non cancelable. Believe it or not, if you don't have 20% to put down, then your far better off paying PMI monthly than any of the lender paid or upfront type PMI programs.. Let's say you only put 10% down, and you have really good credit scores, say 740 or above.. your PMI payment would be $114 per month in your purchase scenario. But with a health housing market with appreciating between 3% to 6% then within 3 to 4 years, you would be at 80% loan to value, and once you hit 20% equity and 3 years has passed, then you can call your loan servicer and ask if they will remove the PMI.. so long as the property appraises, you can get it removed and you wont have to refinance to do it.. 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. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Jan 25th 2016
1
0
Subscribe to our news feed.