Many home buyers are unable to avoid monthly mortgage insurance–it’s part of taking that next step and buying a property even if you don’t have a large down payment. But if possible, use these 5 strategies to avoid paying monthly mortgage insurance.
- Make a minimum 20% down payment on a conventional loan. 20% down is the magical number to avoid paying monthly mortgage insurance.
- FHA requires mortgage insurance on all loans, so avoid FHA loans if possible.
- 1st and 2nd mortgage combos eliminate the need for mortgage insurance.
- HOMEPATH loans do not require mortgage insurance. Homepath loans are only allowed when “Fannie Mae” is the seller.
- Mortgage insurance can be paid in two ways: “Single-Paid” or “Monthly-Paid”. Choose the single-paid option and pay the mortgage insurance in full to eliminate the need to pay monthly.
With a conventional loan, monthly mortgage insurance eventually falls away, and FHA loans can always be refinanced into conventional loans to eliminate mortgage insurance. So don’t feel bad if you need to incur mortgage insurance to get into a home.