3.5% Down FHA … or …3% Conventional
Which one do I choose?
3.5% Down FHA
You pay a 1.75% Upfront Mortgage Insurance Premium which is automatically added to your loan amount (MIP).
You pay monthly Mortgage Insurance Premiums.
FHA is more lenient with lower credit scores, financial issues, less savings in accounts & less reserves.
If buying a condo, more difficult to locate something you like as the condo complex you choose must be FHA approved – there are not too many that are.
You do not have to be a first time home buyer.
3% Down Conventional
No Upfront Mortgage Insurance Premium.
You pay monthly Mortgage Insurance Premium at a slightly higher rate than the FHA Monthly Premium. MIP can be removed at five years with certain LTV.
Not very lenient with credit issues and low reserves. Works well with credit scores 640 and above.
Your property selection is not restricted.
At least one borrower must be first-time home buyer.