FHA vs 5% Conventional

[Drew Lamb]

Hey community, I approached a bank today about an FHA loan on a potential property and after talking for a bit he told me they could do a 5% conventional if I was interested. I just wanted to see what you guys thought?

[Michael Cohen]

@Drew Lamb - even though the down payment for FHA is 3.5%, it also has an upfront MIP of 1.75% as part of the closing costs that you have to consider. Plus MIP/MI/PMI is higher on FHA so even though your FHA rate will be lower, your APR will typically be higher than a conventional loan. Get scenarios for both, but usually is less up front and lower monthly with a 5% conventional loan.

If you're a first-time homebuyer, you can do HomeReady which is a 3% down with reduced MI.