If you have an FHA loan, you must pay mortgage insurance until about 20 percent equity exists in the home. When your home has a loan-to-value ratio of 78 percent or higher, you must keep mortgage insurance. This protects the lender during the vulnerable early years of a loan. Specifically, the mortgage insurance can’t be removed from an FHA loan until 78 percent loan-to-value is achieved. That means you usually must have mortgage insurance until you have 22 percent equity. Of course, if there is 20 percent equity in the home at the time of funding, you aren’t required to carry mortgage insurance on an FHA loan.
So, there is no set time frame that you must carry mortgage insurance for all instances.
If you got a loan after June 3, 2013, you may actually have to wait at least 11 years to get your mortgage insurance removed if you paid more than 10 percent down. If you have a smaller down payment, you may need to refinance. Now, if you got a 20-year, 25-year or 30-year FHA loan and put more than 20 percent down, you may only need to wait five years.
Yet, there are still more rules. For example, if you miss payments or are late on payments, the lender might not remove your mortgage insurance. You won’t need an appraisal, because it’s not actually refinancing the loan.
To put it simply, there are multiple variables and there isn’t a set time frame to remove mortgage insurance from an FHA loan. Your best bet is to talk to your lender so you have a plan in place. Then, don’t miss payments and pay on time all of the time. When you believe you qualify for the removal of your mortgage insurance, it’s best to request it in writing.
Thinking of Purchasing a Home in Irvine, California?
If you’re thinking about buying a home in Irvine or any of the surrounding communities, we can help you find one that’s just right for you. Call us at 949-385-1684 or get in touch with us online to let us know what you’re looking for.
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