Any unconventional loan products out there? What would you do?

[Ben G.]

Hello Everyone. 

I live in California and it looks like I'm about to be relocated to Carlsbad, NM. I own one rental SFR free and clear that is worth $260k-$300k with a net ROI of about $1200/mo. The home I currently live in I bought in Dec 2018 with an FHA. What I didn't realize when I decided to let one of my houses foreclose back in 2011 is that when I was able to buy a home again that the FHA loan would require PMI for the life of the loan, regardless of how much I put down or paid off. By the way, the bank didn't actually foreclose until April 2014 so my 7 years won't be up until April 2021.

I figure if I have to move from CA to NM, I'm going to get what I always wanted which is a decent home on an acre or more with a large workshop. So far it looks like this is going to cost me about $375k-$450k. The problem is that the FHA limit in Carlsbad, NM is about $350k. I can swing a 10% down payment at that price range but anything more than that and I would be dipping into my emergency fund or rental reserves and I don't want to do either.

I'm going to sell my current residence but I don't think I'm going to walk away with much after taxes, commissions and closing costs. Since I had to go with an FHA and pay PMI anyway, I only put 5% down on the $370k I paid for it. I attempted to get a HELOC on my rental a few months back but was told I couldn't qualify due to the foreclosure. That was with Wells Fargo and I didn't try any other banks because my plans had changed at that time.

I know these aren't huge issues and I can always rent or sacrifice my desired standard of living. I'm single so I can live on the cheap in an RV with relative ease. I'm just curious, from a financing perspective, what would you do? Is there any possible way of getting out of the PMI before my 7 years is up?

My first stop is going to be at a local community bank/portfolio lender to see if they can help me out. I'm just waiting for the official word that I'm being transferred.

Apologies for the length, 

Ben.