FHA + Owner Finance to avoid PMI?

[Nate Burnett]

Hi All,

I just was wondering what others though of this idea. My husband and I got approved for an FHA mortgage, it requires 3.5% down. Unfortunately with FHA they also require PMI until we owe less than 80% of the loan.

Now my thoughts are, what if we can talk the owner into financing 20% of the purchase? 

Could this get us around the PMI requirement and allow us to have an overall lower payment which would result in more cash flow immediately?

The price we're looking is about $250,000, so a 3.5% downpayment would give us about a $230/month PMI, is there a way to structure it with owner financing to make it a better deal? OR should we tough it out to accelerate the payments so we can get below the 80%? The property with us occupying one unit, at least the one we are looking at is $300/month cash flow positive after estimated maintenance/bills

I'd like to have more cash in hand so we can flip the units and increase rents (all the units in our area for sale are horribly dated).

Thanks!