Conventional or FHA?

[Alison Wegenke]

Hello all,

Buying my first property ($205,000 duplex). Having a very hard time deciding whether to put 15% down on a conventional loan at 2.9% interest. OR putting 3.5% down on an FHA loan for 2.5% interest with an additional $136 of PMI every month.

I know the better value over time is certainly the conventional loan and will produce approximately $200 more cash flow every month as compared with the FHA. HOWEVER, putting 15% down will nearly wipe out my liquid cash reserves and I'll have nothing to pursue other properties with in the near future.

I'd go with the FHA and pursue a refinance (we'll be doing renovation on the property) but with mortgage rates on the rise, I'm concerned refinancing may not be beneficial in the future.

Any advice would be very much appreciated!

-Alison