First time home buyer - FHA or conventional loan?

[Nicholas Monroe]

Hey BP!

I'm looking for some advice on which loan I should use for the purchase of my first house. I'm looking to see what is better for long term vs. short term. Below are some details on each loan.

Purchase price - $381,400

FHA - 3.5% down, 2.75% interest rate. ~$2,330 monthly PMI and ~$24,000 cash needed to close, 30YR

Conventional - 5% down, 2.875% interest rate. ~$2,270 monthly PMI and ~$31,000 cash needed to close, 30 YR

The conventional claim is that if I do the FHA loan I'll be stuck with the insurance for the life of the loan and long term pay more money for the house. Being this is my first purchase, I'm looking for some help figuring out the numbers and what's really the best option.

Thanks,

Nick

[Stephanie P.]

@Nicholas Monroe @Kristine Baltazar

You should be able to get a 3% down conventional loan and there are numerous DPA (down payment assistance) programs out there if you qualify. Some income qualify. Some credit qualify. Some do both. Both are going to require MI, but Nick is right, FHA is more expensive because of the combination of upfront and monthly MI.