![]() Verification of your income and employment.A full review of your credit score and credit history.A new home appraisal to check the current value of your home.Start hereįrom there, the lender will check your eligibility for a no-PMI conventional loan. Be sure to add closing costs to your existing loan balance if you wish to avoid paying them out of pocket. Let your loan officer know you want to refinance into a conventional loan and cancel FHA MIP. All you need to do is apply with a mortgage lender. The refinancing process is straightforward. The limits are typically higher when it comes to FHA loans. Lastly, make sure your debt ratios are in line for qualifying for a standard conforming loan. ![]() The higher your credit score, the more you could save on your monthly mortgage payments. You also need a credit score of at least 620 to refinance into a conventional loan with most loan servicers. To find your home equity, subtract your current mortgage balance from the value of your home. In other words, you will need about 20% home equity to refinance. “This is possible as long as your LTV is at 80% or less.” “After sufficient equity has built up on your property, refinancing from an FHA or conventional loan to a new conventional loan would eliminate MIP or PMI payments,” says Wendy Stockwell, VP of operations support and product development at Embrace Home Loans. Plus, there are never any prepayment penalties on FHA loans. The good news is that there are no restrictions on refinancing out of FHA into a conventional loan with no PMI. So to stop paying mortgage insurance premiums, you’d need to refinance out of your FHA loan. These FHA mortgage loans are not eligible for automatic mortgage insurance cancellation. Most FHA homeowners today have a loan with the following characteristics: If you put less than 10% down, you’ll pay MIP until the loan is paid in full or refinance into another type of mortgage, such as a conventional loan. If you got an FHA loan after June 3, 2013, then your MIP will go away after 11 years of on-time payments, provided you put at least 10% down. For example, if you owed $160,000 on your home that’s valued at $200,000, your LTV would be 80% because the loan balance ($160,000) is 80% of the home’s original value ($200,000).Īn LTV of 80% means you have 20% home equity which should be enough to refinance into a conventional loan with no PMI. Loan-to-value ratio (LTV) is another way to measure your home equity. But you must have 22% equity in the property, and you must have made all mortgage payments on time.įor homeowners with FHA loans issued on or after June 3, 2013, you must refinance into a conventional loan and have a current loan–to–value ratio of 80% or lower. If you received your FHA loan before June 3, 2013, you were eligible for MIP cancellation after five years. Here’s what you need to know about your MIP removal options. If your MIP won’t expire on its own, you will need to refinance out of your FHA loan to eliminate its MIP. But only if you got your loan before 2013 or put at least 10% down when you bought the home. It could be possible to eliminate your FHA mortgage insurance premium without refinancing. Thankfully, PMI cancellation on a conventional loan is generally much more straightforward. Homeowners often confuse MIP and PMI, but cancellation rules differ vastly. Mortgage insurance for a conventional loan is commonly referred to as PMI, or private mortgage insurance. Keep in mind that these rules only apply to the MIP on an FHA loan. ![]() You can check your FHA removal eligibility with a lender. So many FHA homeowners have enough equity to refinance into a conventional loan and cancel mortgage insurance, even if they only bought a few years ago. The good news is that home values are rising nationwide. This is the only FHA MIP removal option if you put less than 10% down
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