PMI insurance worth it?

[Gavin Wynn]

Is a small amount down worth the PMI insurance? I am a 21 year old investor out of Huron County Ohio trying to acquire my second multifamily property and still have a lot to learn. Thanks.

[Kevin Sobilo]

@Gavin Wynn, it depends on what kind of loan and what your future plans are.

If you are house hacking and using an FHA loan, then it might NOT be worth it. The main reason is that with an FHA loan the PMI stays payable for the entire life of the loan!

If you are house hacking and using a conventional loan, then the PMI drops off when the LTV gets to 80%. I think the loans automatically drop the PMI when it hits 78% OR if you think the property value has increased (perhaps because you did work to it) then you can get an appraisal and potentially get the PMI dropped sooner.

For most people the PMI decision is more about them being able to buy sooner without having to save more $$$ but if for you its about how best to deploy money then I also suspect that if you buy a house hack with PMI and then use leftover money to buy another investment that would give superior returns to buying a single house hack with no PMI.

[Remington Lyman]

Quote from @Gavin Wynn:

Is a small amount down worth the PMI insurance? I am a 21 year old investor out of Huron County Ohio trying to acquire my second multifamily property and still have a lot to learn. Thanks.

I can be. When I first started I have PMI

[Dalton Summers]

I wouldn't worry about having to pay PMI regardless of whether you purchase using Conventional or FHA financing. You'll probably just end up refinancing it in a year or two anyway. The better question might be how much will that home appreciate if you're waiting to save up 20%?