Get an FHA now or save for convential loan down payment?

[Lawrence Moore]

Hello everyone!

I am a new graduate with not a lot of savings. I am moving to Houston, TX and am interested in buying a property to live in for 1 or 2 years and then rent out afterwards. However, with not having much savings, I am wondering if it is wiser to get an FHA loan with 3.5% down and the required mortgage insurance premium (1.75% I believe) or live in a rental until I can afford the 20% down payment to reduce my interest payment on a conventional loan. I am interested in $200,000 properties and it would probably be another year before I could afford the 20% down payment.

Any input is appreciated. Thank you!