To sum up, when it comes to PMI, if you have less than 20% of the sales price or value of a home to use as a down payment, you have two basic options: Use a "stand-alone" first mortgage and pay PMI until the LTV of the mortgage reaches 78%, at which point the PMI can be eliminated.
See if you qualify for a VA loan
For eligible veterans, service members, and other armed forces personnel, a VA loan is usually the best way to avoid PMI. VA loans are available with 0% down, and they're the only government-backed mortgage option with no monthly mortgage insurance payments.
You might be eligible for a no-PMI loan. For example, Bank of America offers the Affordable Loan Solution® mortgage, which lets borrowers with modest incomes put down as little as 3 percent with no mortgage insurance required.
As a rule, most lenders require PMI for conventional mortgages with a down payment less than 20 percent. ... The lender will waive PMI for borrowers with less than 20 percent down, but also bump up your interest rate, so you need to do the math to determine if this kind of loan makes sense for you.
Some credit unions can waive PMI for qualified applicants. Piggyback mortgages. Physician loans.
Credit score is used to determine PMI eligibility, price
Insurers, like mortgage lenders, look at your credit score when determining your PMI eligibility and cost.
Sometimes called a “piggyback loan,” an 80-10-10 loan lets you buy a home with two loans that cover 90% of the home price. One loan covers 80% of the home price, and the other loan covers a 10% down payment. Combined with your savings for a 10% down payment, this type of loan can help you avoid PMI.
The traditional way to avoid paying PMI on a mortgage is to take out a piggyback loan. In that event, if you can only put up 5 percent down for your mortgage, you take out a second "piggyback" mortgage for 15 percent of the loan balance, and combine them for your 20 percent down payment.
Before buying a home, you should ideally save enough money for a 20% down payment. If you can't, it's a safe bet that your lender will force you to secure private mortgage insurance (PMI) prior to signing off on the loan, if you're taking out a conventional mortgage.
The amount you pay for PMI depends on your credit score and LTV ratio, but could range from $30 to $70 each month for every $100,000 borrowed.
If you are purchasing a $300,000 home, you'd pay 3.5% of $300,000 or $10,500 as a down payment when you close on your loan. Your loan amount would then be for the remaining cost of the home, which is $289,500. Keep in mind this does not include closing costs and any additional fees included in the process.
How Can I Qualify for a Bank of America Mortgage? You'll need a FICO credit score of at least 600 and a maximum debt-to-income ratio of 55% to qualify for a mortgage with Bank of America. However, each loan product may have its own requirements.
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