100% financing with no PMI vs. 5% down payment for first home.

[Elizabeth Bryant]

I am new to the group and will be purchasing my first home. I am eligible to benefit from VA benefits with 100% financing and no PMI at 3.5% interest. I also have another option of 5% downpayment and 3% interest rate with PMI. Trying to determine which is better. Any thoughts.

[Joel Calkins]

The choice really boils down to your financial position but here's what you can do to narrow it down. If you have a smaller cash reserve it may take longer to get in that 20% equity in your home to get rid of PMI and usually PMI ranges up to one percent of the loan amount per year.

If you use your VA benefits the extra .5% interest may be peanuts compared to the PMI. Find an online calculator and plug in your numbers to get an amortization schedule to figure out your monthly payment for both VA and the FHA. If you need any help feel free to PM me!