The loan you are probably looking for is an 203k loan, which is an FHA rehab loan. You can take out a loan for more than the purchase price, but you have to get all your estimates lined up before you close on the loan, and there are some other things that you would need to know. If the property requires less than $35,000 in repairs, you can do a streamline 203k, which just makes it a little easier.... more
What your lender is telling you is true based on my experience. The MI is based on the purchase price. Typically after 12 months you can have a formal appraisal (not a brokers estimate of value, aka BPO, CMA, etc...). At that point you can contact your lender and request the MI be removed (assuming it appraises high enough). Hope this helps.
Houlihan Lawrence... more
A couple of months ago no money down would be an option. With the most savy mortgage lender you might get away with 95% if you intend to occupy one of the units. I have seen on other ocassions where the lender would let you go owner occupied if you could prove you where living on over 50% of the property. I dont think underwriters at the bank are willing to make this excpetion anymore. Your best bet save for the down payment of atleast 10% and have reserves of atleast 3-6 months for payments and expenses. The lender will take into account some rental income, but if it a residential loan it is alot tougher to state rents.