Seeking Advice on PMI Removal for Fannie Mae HomeStyle Renovation Loan

[Ahmed Moustafa]

Hi BP community!

I recently completed a major renovation on my property financed through a Fannie Mae HomeStyle Renovation loan, and I'm now looking into options for removing Private Mortgage Insurance (PMI). I'd love to get feedback from anyone who has been through a similar process, as I've received some conflicting information.

Here’s the situation:

- My lender mentioned that even though my loan-to-value (LTV) ratio is below 80% due to the renovations (currently at 73%), I can't request PMI termination based on the property improvements alone, since the renovations were part of the initial HomeStyle loan. They explained that Fannie Mae (according to an exchange with their Servicing Portfolio Manager at Fannie Mae for a similar but not an exact loan) does not allow PMI removal for improvements already included in the original loan’s scope until after a two-year seasoning period.

- However, I’ve seen general Fannie Mae guidelines that suggest if substantial improvements have significantly increased the property value, you might be able to request PMI removal earlier, provided the LTV is 80% or below. But it’s unclear if this applies to HomeStyle loans specifically, given the initial renovation appraisal already accounted for these improvements.

I want to know if anyone here has been successful in getting PMI removed under similar circumstances or has any insights into the specifics of Fannie Mae’s policies for HomeStyle Renovation loans. Is there a workaround or a way to get this re-evaluated?

Any advice or experiences would be greatly appreciated. I would appreciate anyone who can point me to guidelines that can confirm one of the two information. I could not find any details that confirm that online. Thanks in advance for your help!