• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
MyLendingPal Logo

MyLendingPal

Georgia Mortgage Brokers

  • About
    • Blog
    • Careers
    • FAQs
    • Our Process
  • Home Loans
    • Conventional
    • FHA
    • First Time Home Buyers
    • VA
  • Refinancing
  • Resources
    • Are You Ready To Buy?
    • Finding The Right Home
    • How To Find An Agent
    • How To Get Pre-Approved
    • How To Make An Offer
  • Calculators
    • Balance
    • Conventional Loan
    • FHA Loan
    • VA Loan
  • 833.379.0797
  • Apply Now

How To Get Rid Of PMI On An FHA Loan

February 8, 2021

little house on top of money being loaned to but itA Federal Housing Association, or FHA, loan can give people without a lot of savings or credit the opportunity to buy a house with a low down payment. This loan has a lot of advantages for certain types of borrowers, but it also comes with the required expense of private mortgage insurance, or PMI. Here is how to get rid of PMI on an FHA loan:

What Is PMI On An FHA Loan?

PMI is a type of insurance that protects the lender against the risk that a borrower will stop paying their mortgage payments, and it can add hundreds of dollars onto a person’s monthly mortgage payment. However, it is not permanent; there are several ways borrowers can eliminate PMI from their FHA loan.

How Do I Remove PMI From My FHA Loan?

There are two categories for FHA loans: those that were issued up to June 3, 2013, and those whose applications are dated after that point. On that date, FHA rules changed that impact the options for removing PMI.

Most FHA homeowners fall into the latter category. Thirty-year FHA loans that were taken out after June 2013 with less than 10 percent down are not eligible for automatic mortgage insurance cancellation. However, there are no restrictions stopping homeowners from refinancing out of an FHA loan into a conventional loan that does not have PMI. FHA loans do not have prepayment penalties, so borrowers can refinance any time they choose.

family moving in after knowing How To Get Rid Of PMI On An FHA LoanUnder favorable market conditions where home values are rising, some homeowners find that a house that they put 3 to 5 percent down on just a few years earlier has enough equity to allow them to refinance without PMI. Only 20 percent in equity is needed to do so.

Those who received their FHA loans prior to June 2013 become eligible for PMI cancelation after five years as long as they have built 22 percent equity in the property and have made all of their payments on time.

The Homeowners Protection Act (HPA) gives homeowners two ways of taking PMI off their home loan. A final or automatic PMI termination can be granted when they reach certain home equity milestones, or the borrower can ask for it to be removed when they achieve 80 percent equity. Outlined below is a closer look at some of the options.

Refinance Your Loan From FHA To A Conventional Loan

Some homeowners choose to take advantage of low mortgage rates and refinance their mortgage. Borrowers who have paid their loan down to 78 percent of the value of the home are eligible to refinance into a conventional mortgage without needing to pay PMI.

Reduce Your Loan Balance To 80 Percent Of Home Value

Homeowners who are making their payments on time can determine the date they will reach 80 percent using their PMI disclosure form. If this figure is unavailable, it can be requested from the loan servicer.

Those with extra cash can reach this point faster if they make additional payments. For example, prepaying the principal on the loan reduces the balance, and this can allow homeowners to build equity faster and save money on interest payments. Even paying just $50 a month extra can be enough to see the loan balance and total interest paid drop.

Some borrowers might put a lump sum toward the principal of the loan or come up with an extra mortgage payment each year to reach the 20 percent equity level more quickly.

Wait Until Your Loan Reaches Its Midpoint

The HPA requires a mortgage lender to drop PMI when a mortgage balance hits 78 percent of the home’s original purchase price as long as the borrower is in good standing. They are also required to do so at the halfway point of the amortization schedule. Those with a 30-year loan will reach the midpoint after 15 years. Even if the mortgage balance has not risen to 78 percent at this point, the lender must still cancel the PMI in what is known as final termination.

Get Your Home Value Reappraised By A Professional

keys being handed over for a homeHomeowners who live in an area where home values are rising may choose to have their home’s current value reappraised by a professional. Those who have owned their home for at least two years and have 75% LTV (loan-to-value) can cancel PMI based on current value; those who have owned their home for more than five years may cancel at 80% LTV.

Eligibility Requirements For Removing PMI

Once they reach 20 percent equity, homeowners must request cancellation of the PMI in a written letter to the lender. They must have a good payment history, be current on their payments and meet other requirements, such as not having any liens on the property. A home appraisal may also be necessary; those whose home values have dropped might not be allowed to cancel their PMI.

Speak With A Professional Mortgage Brokerage About How To Get Rid Of PMI On An FHA Loan

If you would like to learn more about getting rid of the private mortgage insurance on your FHA loan, get in touch with the professional mortgage brokerage at My Lending Pal to explore the options that are available in your case.

Primary Sidebar

Have a question?

Ask a question or request a consultation, and we will respond to you in a timely manner.
  • This field is for validation purposes and should be left unchanged.

Home Loans

  • Conventional
  • FHA
  • First Time Home Buyers
  • VA

Calculators

  • Mortgage Balance
  • Conventional Loans
  • FHA Loans
  • VA Loans
Contact
833.379.0797
Email
info@mylendingpal.com
Address
5400 Laurel Springs Parkway, Suite 304 Suwanee, GA 30024

Footer

MyLendingPal Logo

Home Loans

  • Conventional
  • FHA
  • First Time Home Buyers
  • VA

Calculators

  • Mortgage Balance
  • Conventional Loans
  • FHA Loans
  • VA Loans

Get the latest news & updates

Equal Housing Lender Logo
MyLendingPal, Inc, NMLS ID #1734346, (www.nmlsconsumeraccess.org); Corporate Office: 5400 Laurel Springs Parkway, Suite 304, Suwanee, GA 30024. Georgia Residential Mortgage Licensee #61544. Principal Loan Originator: Ricky Merchant, NMLS ID: 1517056. Georgia License # 54264. For questions regarding state licensing, please contact (404) 433-8918. Not all products and options are available in all states. Terms are subject to change without notice. Any rates or terms are speculative only and can change without notice.
Google Rating
5.0
MyLendingPal, Inc
MyLendingPal, Inc
5.0
Balachandar Sundaresan
Balachandar Sundaresan
17:30 23 Jun 20
Roger Merchant and his team were very helpful, right from getting a great rate to completing all process on time and being super responsive. Would happily recommend him!!
Dinesh Nair
Dinesh Nair
14:41 30 Jan 20
I would definitely recommend MyLending Pal for all mortgage needs. It all started with a great competitive quote on refinance and excellent service continuing all the way until closing. Priti, Ricky and Roger were a pleasure to work with.
Ramesh Kumar
Ramesh Kumar
02:03 17 Dec 19
I would really recommend Nations First Home Mortgage, if you are looking for the best home mortgage options. I was very much glad to work with this team and they have saved lot of time and money!!
gulshan rai
gulshan rai
03:21 17 Apr 19
I would highly recommend Mr Roger to anyone in the area looking for an amazing lender. He made the mortgage process so easy and effortless. I could tell him and his team were very attentive to all the details that came with applying for a mortgage and were quick to remind me of any deadlines that were approaching.It was super easy to work with Mr Roger.My special thanks to preeti who did an amazing job to get things done in the timely manner. If I had any questions, it was almost like she was waiting at her desk for my phone call to answer the questions immediately. The loans closed on time and without a glitch. I would highly recommend them to anyone
Ajith Nair
Ajith Nair
01:50 13 May 19
We highly recommend Roger for financing mortgage. Roger and his team were excellent through out the process and we had a very smooth purchase. They were always available when we had any questions. It was an amazing experience working with Roger and his team.
Pratul Patwari
Pratul Patwari
13:03 20 Jul 20
Roger Merchant and Priti Vin helped us in buying our first home. They understood our needs and took care of everything for us. They were very good with the communication through the process. They will always be my first choice in future for the mortgage services.
Sujatha Hariharan
Sujatha Hariharan
20:51 26 Jul 20
They were able to find me great rates. Service was quick and communication prompt. The loan process can be daunting as is the document gathering process but this was the easiest and quickest that I have experienced. Highly recommend!
Dinesh Nair
Dinesh Nair
15:53 30 Jul 20
I would definitely recommend MyLending Pal for all mortgage needs. It all started with a great competitive quote on refinance and excellent service continuing all the way until closing. Priti, Ricky and Roger were a pleasure to work with.
Manu Pushpanath
Manu Pushpanath
15:59 29 Jul 20
Great lender to work with. Right from document collection till closing they did it in 2weeks. The fastest closing I heard and get to experience myself. One improvement I suggest is it will be good if the closing attorney can come into the house for completing the closing. Considering current situation it will add a lot of value to the reputation. Thanks Milan and team for a good closing experience.
Sakthi S
Sakthi S
20:46 01 Sep 20
Would definitely recommend Roger and his team.Refinanced for the second time and with roger, I didn’t feel like I refinanced.The process was very smooth and fast.The rates were very competitive and it was amazingworking with Roger and his team.I’d recommend him for sure.
Sunny Patel
Sunny Patel
21:17 01 Sep 20
They were quick, courteous, and professional. They got me an excellent rate and helped make the process smooth. I would recommend using to my friends and family!
Emmitt Rathore
Emmitt Rathore
14:57 22 Dec 20
Roger helped us find an unbeatable rate!His decades of work in the industry made it easy for us to complete many processes with the lender, and helped us close on time!I will definitely be passing the good word around and recommending family and friends to him.I look forward to our next real estate transaction with them.
M Alamoti
M Alamoti
01:02 11 Jan 21
I had the experience of using their service. They know what they are doing. They are very honest, professional and caring. I have no doubt and hesitation to recommend them to anyone who is looking to purchase a home. I am very pleased for their service.
Next Reviews Write a review
powered by Google

© 2021 MyLendingPal · Powered by 321 Web Marketing · Website Privacy Policy & Terms of Use