How to Remove FHA Mortgage Insurance From Loan
The Federal Housing Authority (FHA) insures a large number of consumer mortgages in the United States. This means that any FHA-insured loan that defaults will be recouped by the federal government. This insurance cannot be removed. However, all FHA loans that exceed a certain loan-to-value ratio are required to have PMI, or Private Mortgage Insurance. This insurance can be removed once you meet certain obligations.
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Instructions
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Check to make sure your loan is insured by the FHA. There should be a notation on your closing documents. If you're unsure, call your lender and simply ask if your loan is FHA-insured. Ask if you are currently paying PMI on the loan.
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Calculate your current loan-to-value ratio (LTV) on your mortgage. To do this, you'll need an accurate market value of your home. See Resources for a valuation site. Divide your current mortgage balance by the value of your house to get your LTV. For example, if you have a $200,000 mortgage on a home worth $250,000, your LTV is 80 percent.
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Contact your lender to find out the LTV requirements for PMI. Nearly all lenders require PMI on mortgages whose LTVs are greater than 80 percent. If you are under the 80 percent threshold, you should have no trouble removing the PMI charges on your loan.
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Pay down your principal if you are above the 80 percent threshold. There is no way to eliminate your PMI (without refinancing) on your current loan if you are above this percentage. You can use investments, savings, stocks and retirement accounts to bring your mortgage balance below the 80 percent mark.
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Confirm the removal of the PMI insurance premiums on your next statement. Usually PMI payments are rolled into your standard monthly payment--once you remove this insurance, they should be knocked off your payment.
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