- Borrow no more than 80 percent of the home’s value.
- Find a lender willing to give you a first mortgage in an amount equal to 80 percent of the home’s value. Then see if that same lender, or a different lender, is willing to give you an equity loan for a portion of the balance you need for the purchase of your home. This option has been referred to as a piggyback loan. In many instances, the first loan will be for 80 percent of the home’s value and the piggyback loan will be for an additional 5 percent, 10 percent, or 15 percent. The more you want to borrow in the piggyback loan scenario, the harder it might be for you to obtain the loan and the higher your interest rate and costs might be.
- Obtain a loan for 80 percent of the home’s value and then have a family member gift you the difference you might need to buy the home.
- Apply for a FHA loan. (Note that a FHA loan may actually be more costly for you than obtaining a non-FHA loan with MI.)
- If you are buying a home, negotiate to have your seller pay the upfront MI cost. That cost could be negotiated as part of the contract, and the seller could pay your MI fee upfront as a closing cost credit. Once paid, you would not have to pay MI with that loan, but if you were to refinance that loan, you might then have to pay MI with the new loan.
- Have the lender include the MI fee as part of the interest rate that it might charge you. The interest rate might be a tad higher and last for the life of the loan, and you will still technically be paying MI, but this does give you an additional option.
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