Posted by: Larry Stevens | June 25, 2014

Removing Monthly Mortgage Insurance on FHA Loans

Real Estate Finance Insights

On numerous occasions we have been called about how and when an FHA loan is eligible for Monthly Mortgage Insurance (“MMI”) removal.  This applies for FHA loans originated prior to June 3rd, 2013 (when FHA made it basically permanent).  We have heard of many borrowers who have been told they just had to wait 5 years and then presto! Call it in folks.  Get that MMI removed!

Unfortunately That’s Only Part of the Requirement

Removal of MMI may only occur after (detailed Mortgagee Letter from HUD) 60 months of MMI has been paid AND one of the following has happened:

  • If ORIGINAL FHA loan was a Purchase:
    • Principal Reduction/Pay-Down based on Original Purchase Price is now 78% loan-to-value
  • If ORIGINAL FHA loan was a Refinance:
    • Principal Reduction/Pay-Down based on Appraised Value at time of 1st Case issuance is now 78% loan-to-value

What Does That Mean?

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