Do I need to have 20 % down payment when I refinance from FHA loan to conforming ?

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Hello everyone. I am purchasing a house but the loan I could get was FHA because i did not have 20 % down and not enough credit for conforming loan. I could put 15 % down on the house but my question is whether i should do that or go with the minimum of 3 % because with FHA loan you pay premium mortgage insurance 1.5 % upfront and .5 higher interest rate. Lets say if i build a better credit in 6 months to qualify for a conforming rate and refinance the house from FHA to conforming do i need to have 20 % down for conforming loan or should i put the money to FHA loan and that 15 % is counted as home equity. All I need is 5 % after that right or do i need to have 20 % in cash?

2 Comments
  1. Reply
    answer man77
    May 16, 2011 at 4:37 am

    First to Marty S. How come your answer to everyone is the same(I have a company who can do this contact me. Do you not know the answers yourself and are just trying to get anyone to call you and then see if you can handle the mortgage?).

    To answer your question it would depend on a few factors. The most important one is. What is your current credit score? If it is mediocre then I would put the minimum down and go FHA. If it is above 720 then I would put the 15% down and go conventional and submit a new appraisal about 1 year from now to have the PMI removed. Because with a FHA you must carry the PMI for a minimum of 5 years regardless of how much you put down.

  2. Reply
    Expert Realtor
    May 16, 2011 at 4:52 am

    To avoid PMI? You have to be 79.9% or under.

    Most conforming loans right now are wanting 10% down and you can do a 80/10/10

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