Why Private MI over FHA – National MI Private MI vs FHA MI

Why Private MI over FHA

Not all loans are the same. Are you providing your customer with the best loan options?

At National MI, we can offer a wider range of payment options than FHA, including monthly or single premium options, paid by the lender or member. It’s not all about monthly payments, it’s about costs. The true cost of mortgage insurance for a homebuyer with an FHA loan can really add up and may not be their best fit in the long term. ...Read more

Identify Loan Limit Comparison at a Glance Facts about MI

National MI Loan Limit Locator

Conventional vs. FHA

Ease of Use
Less paperwork	National MI
Faster closing	National MI
Advantage in multiple offer buying situations	National MI
Straightforward appraisals and processes	National MI

Favorable Pricing and Overall Costs
More monthly savings in HIGHER FICO tiers	National MI
No upfront fees	National MI
Cancelable	National MI

Purchase Power and Options
Higher loan limit	National MI
Lowest down payment	National MI
No DTI overlay	National MI
Less cash to close	National MI
100% gift funds allowed	Either Way
Prior bankruptcy	Maybe FHA*
Less than stellar credit score	Either Way
Please refer to National MI’s Underwriting Guidelines Manual and Master Policy for a complete description of policies and requirements. *FHA may not support the loan amount.

FACTS about FHA mortgage insurance premiums: FHA mortgage insurance premiums have nearly doubled since 2008. A borrower now has to pay $17,398 in premiums during the first five years after the purchase of a median-price home ($212,100), compared to just $9,210 in 2008.¹

The recent decision by the FHA to lower annual mortgage insurance premiums will delay the ability of FHA to attain the two percent minimum capital ratio of risk insured that they are required to maintain. As of February 26, 2015, they stood only at a 0.41 percent capital ratio, one fifth of the two percent statutory minimum.²

The FHA premium reduction counteracts a bipartisan agreement to bring private capital into backing mortgages and rely less on taxpayers as a backstop.³In the wake of the financial crisis, the FHA insurance fund required $1.7 billion from U.S. taxpayers due to a capital shortfall.

Experience the conventional wisdom that comes with National MI. Below are examples of the monthly payment differences per $100,000 financed with National MI Conventional vs. FHA.

Lower monthly payments

For those borrowers with good FICO^® scores, National MI can still deliver lower monthly payments over an FHA loan.

We also offer a wider range of payment options than FHA, including monthly or single premium options, paid by the lender or borrower.

30 YR MORTGAGES:

Conventional with Mortgage Insurance vs FHA Monthly Savings ($) with Monthly Advantage BPMI

CREDIT SCORE	85%	90%	95%	97%
	LTV
800+	$37	$28	$19	$4
780-799	$37	$28	$19	$4
760-779	$37	$28	$19	$4
740-759	$36	$19	$4	$13
720-739	$34	$11	$8	$29
700-719	$23	$4	$27	$61

National MI FHA Monthly Saving per $100k Financed

Assumptions:

FHA-insured loans assume 4.00% interest rate.
Conventional loans assume 4.25% base interest rate plus impact of Loan Level Price Adjustment (LLPA), which vary by loan-to-value and credit score.

No upfront payment required

With FHA, upfront payment is folded into the loan amount, chipping away at a borrower’s equity.

Cancellable at least 6 years sooner than FHA

Cancellation Comparisons:

LTV	National MI	FHA
> 90% LTV	78% LTV (average 7-10 year term)	Not cancellable
≤ 90% LTV	78% LTV (average 5-7 year term)	Cancellable after 11 years

It’s not all about monthly payments, it’s about costs

The true cost of mortgage insurance for a borrower with an FHA loan can really add up and may not be their best fit in the long term.

Less cash to close

We insure loans with just 3% down, while FHA requires a minimum 3.5% down payment. The time it takes for a borrower to save the additional funds could delay home ownership.

We provide a faster path to closing more loans

No need for FHA case numbers
No need for special Direct Endorsement (DE) underwriters
No need for approved appraisers
No burdensome extra paperwork or package preparation

“The 2014 Mortgage Insurance Report,” WalletHub.
Article: “FHA and the need to strike the right balance for taxpayers,” TheHill.com.
Doug Holtz-Eakin, President, American Action Forum, CQ Congressional Transcripts, Hearing of the House Financial Services Housing and Insurance Subcommittee, February 26, 2015.