Home Possible Single Payment PMI

[Jacob Rogers]

Hi BP Community! I am submitting an offer on a duplex in my market as an owner occupant. I am looking to make a low down payment (3-5%) and so the obvious choice was FHA. However, I don't like the idea of paying PMI for the length of the loan, as well as having an upfront fee. I saw that the Freddie Mac Home Possible loan is available for 2-4 units with a 5% down loan. I also saw from looking online that if you have PMI, you can have the option to pay a single payment upfront at closing and get rid of the monthly PMI. Does anyone have any experience dealing with this or know if you can do this with this loan program? Thanks!

[Andrew Postell]

@Jacob Rogers Home Possible is a Freddie Mac program that has a 3% down option if you qualify based on your income. However, you want the Fannie Mae version of this loan - HomeReady. HomeReady allows for 2-4 unit properties. There are many census tracts (sections of land) that don't have any income requirements. So based on the location of the property you can make $1million and still qualify potentially. Your PMI is also SIGNIFICANTLY lower on this loan program. So if you can find a way to qualify for this loan then it is a very good option and I would not suggest paying upfront PMI on it at all.  Look for a lender that offers this loan in your state....maybe even ask about it in the Iowa forum?  Just an idea.  Good luck!