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5% Down payment without PMI?

I'm looking to buy a house but only have about 5% downpayment. Is there any program out there that I can avoid paying PMI? I can probably have 10% down if there is program to avoid PMI at that.
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June 21 2012 - Alhambra
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Answers (16)

Best Answer

Please don't get confused between not paying MI at all and not having to pay a monthly MI.   You can avoid paying the monthly MI by getting lender paid mortgage insurance. That is where the lender charges you a higher interest rate and uses the extra rebate to cover the cost of the mortgage insurance. Most homeowners don't think they have MI becuase they don't see it in their monthly payment, but it is there.

Any chance that the seller will carry back a second mortgage?   Then you could do a 80% first mortgage, a 15% seller carried second mortgage, and 5% down payment.  (Called an 80/15/5)

If you do put down 10%, you should be able to do an 80/10/10 with some banks. US Bank comes to mind.   Under this scenario there is no MI because your first mortgage is at 80% or lower. 

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June 21 2012
Hi,

While you can't avoid mortgage insurance without putting 20% down, or doing some form of subordinate financing (80/10/10 or 80/15/5), there are options which may be attractive using an upfront mortgage insurance premium, rather than a monthly insurance premium.  This is typically what is used when a lender quotes a loan as having "no mortgage insurance."

The upfront premium can be paid by you, the seller, via a lender credit, an eligible down payment assistance program, or even by gift funds.  In the event of a lender credit, your rate will typically be a little higher than the standard rate, which gives the lender the ability to credit the funds for the upfront premium.  
There are different factors to consider when deciding which type of program to go with, whether subordinate financing, upfront MI, or traditional MI.  Please contact me, and I'd be happy to discuss your scenario thoroughly, and to provide detailed quotes for any scenario.

Sincerely,

Robert
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April 07

You question seems to be already answered by the smart lenders on Zillow. There is a Jumbo >$417K that goes up to 90% LTV with no PMI and there is also a 95% LTV <$417 available. There are some options for you and if you need further information feel free to reach out to me through Zillow or post on this thread.

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April 06
Yes there are 5% down programs that do not require PMI. But these are reserved for loan amounts under $417K. If the loan amount is not below $417K then you will need to place 10% down. And there are actually several different 10% down loan options available. The best 10% down options is what we call an 80/10/10. This is where you have a 80% 1st mortgage, a 10% 2nd mortgage and a 10% down. This option typically offers the best interest rates as well as the lowest monthly payments. Then there is the LPMI option. That stands for Lender Paid Mortgage Insurance. Basically with this option the lender pays the PMI for you through a slightly higher than market interest rate.

If you have more questions or would like to see if you qualify please contact me through Zillow or my personal website. Best of luck!
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April 06
User...There also portfolio lenders that offer a single loan at 90% and no MI.  Provided that you have good credit, it is worth looking at.  Happy to help in anyway.
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December 23 2013
User15195825, your 1ST mortgage would be 80% of the purchase price ( 600K ), the 2ND mortgage would be 10% of the Purchase price ( 75K ) and the remaining 10% is your down payment ( 75K). The max Jumbo loan amount of $625,500 is an Agency Loan, you can go higher with a Non Conforming Jumbo.   
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December 23 2013
Profile picture for ptrr2001
Need help to get better interest rate without PMI. The property I am looking around 750K in VA and I would like to pay 10% down , please explain how 80/10/10 works in my case. And Jumbo loan is maximum 625K in VA.
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December 23 2013
Here is a program that offers 5% down with no PMI
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November 30 2012
Profile picture for SteveMoran4
Hi PEOPLE!!!
FYI, GO WITH
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November 05 2012
Possibly.  The question may be what happens when interest rates rise, which most likely will happen within next few years.  Your second mortgage payment will most likely rise too, as most seconds are HELOC (Home Equity Lines of Credit), which are adjustable. There's not a big difference in the interest rate between a 80/10/10 and having a 90% loan with the MI being paid upfront, thus eliminating the monthly MI with a slightly higher interest rate (and full payment remains fixed throughout the duration of you holding that mortgage).
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June 21 2012
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Thanks Mike! thats helpful. At least I know 80/10/10 still exist to prevent MI.  I would think it would be more economical than having 90/10 and pay MI?
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June 21 2012
80/10/10 means that you have financing with a first mortgage to 80% (to prevent MI), the first 10 means that you will have a second mortgage of 10% of the sales price (for a total of 90% financing, but broken down into 2 loan amounts) and the second 10 represents the 10% down payment.  Some Lenders are willing to provide a second mortgage up to a total of 90% financing, but they're not willing to go to 95%; which is why I believe Brian indicated a Seller carry-back.  That just means that you will receive a first mortgage of 80% from a lender and the Seller will provide you a mortgage (thru the equity of the property) for the remaining 15% (so your making payments to the Lender and Seller).  The drawback on the second mortgage is when interest rates rise, then your second will most likely rise too (vs. having a fixed rate mortgage (which also means fixed payments) for your entire loan amount.
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June 21 2012
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Thanks Brian! So how does the 80/10/10 or 80/15/5 work? Does it require the seller to approve of somehting as I don't quite understand what "...carry back a second mortgage.."means?

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June 21 2012
If the loan amount is less than $417k, then we have a program that will eliminate the monthly MI with only 5% down payment.  Assuming the credit and property profiles qualify.  To answer your question, then yes, the monthly MI may be able to be eliminated.
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June 21 2012
Yes and no. Aside from VA and USDA programs, you can pay a lump sum premium and avoid monthly MI. Or have the lender pay it for you with rebate pricing, there is still MI but you don't pay for it in that scenario. Conventional with 5% down is a great way to go compared to FHA, IF you can qualify anyways. Sincerely, Greg
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June 21 2012
nothing without Mortgage Insurance. even the FHA will require MIP.

20% down to escape the mirtgage insurance
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June 21 2012
 
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