Less than 20% down with no PMI?

[Tyler Brenneman]

Hi, my wife and I are planning on buying out first REI property in Montana in the next few months. We haven't started the pre-approval process yet,but are ready to get started. I have heard that you can get a mortgage with less than 20% down and still not have to pay PMI, does anyone know if this is actually possible and what type of mortgage this would be / what company to go through? My wife and I each have credit scores just below 800, so getting approved shouldn't be an issue.we also are hoping that the property we purchase will be a duplex or triplex, and we would live in one unit for the first year. Let me know if there's anything else that needs to be clarified before you give advice, thanks so much for your time!

Tyler

[Chris Mason]

Originally posted by @Tyler Brenneman:

Hi, my wife and I are planning on buying out first REI property in Montana in the next few months. We haven't started the pre-approval process yet,but are ready to get started. I have heard that you can get a mortgage with less than 20% down and still not have to pay PMI, does anyone know if this is actually possible and what type of mortgage this would be / what company to go through? My wife and I each have credit scores just below 800, so getting approved shouldn't be an issue.we also are hoping that the property we purchase will be a duplex or triplex, and we would live in one unit for the first year. Let me know if there's anything else that needs to be clarified before you give advice, thanks so much for your time!

Tyler

Yes, for SFR, the LO just checks a little box that says "bake PMI into interest rate." Or, next to it, there's another box that says "bake PMI into one-time discount points rather than monthly payment." You can get really fancy and make it an ARM, then you will not even notice the rate hit b/c it's from a "starting" rate that's lower due to it being an ARM. And then their marketing department puts out a flier/website about their amazing "no PMI with less than 20% down!" loan program just for ultra special eligible first time buyers just like you. Stacking the ARM trick on top is especially popular as a special loan just for medical doctors, basically taking advantage of the fact that their 10 years in school didn't include any personal finance 101 component. And because the PMI is baked into the rate rather than a separate line item, it doesn't drop off once you have the equity, so you call them back for a refi when you have the equity, whoop whoop more biz for them.

For duplexes, 15% down works, for 3-4 units the above trickery will not work.