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If I don't have enough money for a down payment, do I always have to pay private mortgage insurance?

by beachb99377 from Salem, Oregon. Mar 6th 2015 Reply


William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,055 contributions

Yes.. unless you you have VA benefits available to you, then all other conforming lending programs require MI if you have less than 20% down. FHA and USDA will have MI regardless of your down payment, and it would be there in most cases for the life of the loan.. There are conventional loan products that will do "Lender Paid" MI, or "Upfront" MI, but regardless of how it's sold, YOU are the one paying it. either in the form of a higher interest rate, more down payment, or a premium added to your payment.. When it comes to MI on conventional loans, understand that the higher the credit score the lower the premium.. also the larger the down payment, the lower the premium. For a 720+ credit score borrower with 5% down, they will pay an MI premium approximately $52 per month for every $100K financed, which when you think about it, really isn't that expensive. But the best part is that after you have paid for at least 2 years, and when your property value increases to where you have 20% or more equity, you can contact your lender and request the MI be removed, and you wont have to refinance to do it. With an average appreciation of 3% to 5% per year, then it' possible you can get MI removed after 3 to 4 years... Even sooner if you put 10% or 15% down. But, If you do "lender paid" MI, you total payment would be the same, but the MI cannot be removed because it's built into your rate.. you would have to refinance to get it gone.. with an "Upfront" MI premium, you would not get any of those funds back regardless of how much equity you build, which is why I suggest you just pay regular MI and then get it removed after a few years. 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

Mar 6th 2015
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Bill Cook (loanpro)
#633 ranked lender in California - 43 contributions

1. The short answer is no.2. More than likely - Yes1. a. No because there are equity sharing programs and investors who may want to partner with you in the down payment to gain a share of the property's equity appreciation in the future. So, you can come up with 10% and they can bring in the other 10% and you avoid PMI. b. No, sometimes the lender will include Mortgage Insurance in the rate. Technically, you are not paying it becaise it is built into the rate, forever.2. Like the other gentlemen explained with VA, FHA, USDAGood Luck. - try us out at Loanshoppers

Mar 6th 2015
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Phil Dumouchel (PhilDu)
#1 ranked lender in South Carolina - 2,228 contributions

It depends on the type of mortgage you are getting, but for most loans (other than VA) if you have less than 20% of the price as a downpayment you will pay mortgage insurance. The minimum downpayment (depending on type of mortgage) is 3-5% - you generally can't borrow those funds except in a few specialized programs like those offered by state housing programs.

Mar 6th 2015
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Jared Thom (jared@legacylendingusa.com)
#144 ranked lender in Arizona - 3 contributions

If you do not have a 20% down payment you will always pay some form of MI unless you qualify for a VA loan. - An FHA loan has mortgage insurance that is permanent forever unless you have an initial down payment of at least 10%. If you put 10%+ down when acquiring property using FHA financing, then the FHA MI will drop once 11 years has passed and the equity position of your property is roughly 78%.- A Conventional mortgage with standard mortgage insurance will automatically drop off once your equity position reaches roughly 78%. A conventional loan where the MI is built into the interest rate (lender paid MI) will never drop because it is built into the interest rate of the loan.

Mar 9th 2015
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