Mortgage Insurance on FHA loan?

[Hector Salas]

Hello BP community. My wife and I, are in search for our first multifamily investment property. We will be using the house hacking strategy. We have ran the numbers on many, and have came across a few that might work. However, I was not aware of mortgage insurance on FHA loan. I am planning on only putting 3.5% down, so my mortgage insurance payment would be really high, and this brings my ROÍ down on those few potential properties to a negative. Has anybody else faced this issue. Any advice would be much appreciated. Thank you in advanced.

[Gaetano Ciambriello]

Mortgage Insurance differs from conventional and FHA.

FHA mortgage insurance is 85 basis points of the loan amount. For a $300,000 loan amount, multiply it by 0.0085 and that will be the amount for the year and then divide by 12 for a monthly payment. FHA PMI will always be 85 basis points with 3.5% down under a $625k loan.

Conventional PMI is based off of the LTV, the borrower''s credit score, if there is a co-borrower, if the borrower is a first time home-buyer, property type. Conventional can be a lot cheaper than FHA.