FHA vs. 20% down - need a primary residence, but might invest

[Neil Quinn]

Hi all,

I currently rent, and want to purchase my own place. I have sufficient funds for a 20% downpayment, but am debating if it might make sense to use an FHA loan only and put 3-10% down instead to keep some funds available for seeking out future deals.

Loan would probably be in the $400k range, which means

3.5% = $14,000

10% (MIPS for 10 years) = $40,000

20% (no PMI) = $80,000

Of course I'd take the 0.88% PMI hit by going FHA which really annoys me given that interest rates are rising already. Worth it though to hold onto some cash and look for other deals?

Living in a high CoL (washington dc/northern virginia) area is killing me because there aren't any real duplex type setups in the area which means i'd end up with a roommate to house-hack.

Go 10% FHA, pay a penalty for 10 years, and keep $40k free for remote investing? Just go with the regular 20% no-pmi and don't worry about it?