Actually a FHA loan of 3% down has a cheaper rate then a Fannie Mae, Freddie Mac at 99% down.
FHA has the cheapest rates.
Pros, low down payment, easiest qualifications, assumable loan (if they qualify), ability to streamline (no credit or income required).
Cons, Upfront mortgage insurance (since you dont have 20% its moot).... Thats my only con.
FHA are great loans if you find a loan officer that knows how to do them, and do them well. They are much cheaper and much easier to do then any conventional loan. They are great loans with lots of pluses.
I would say literally 70% of all loans I do are FHA.
And remember their rates are always cheaper then Conventional regardless of down payment. As per your FICO score. Not that much, I close a FHA loan with somebody with a 805 FICO and got a person approved at 545 FICO. They both got the same rate.
With FHA you are approved or you arent. If you are at 560 you get the same pricing as those at 820. But some lenders wont take it below 620, but for the most part its the same rate.
But ive heard of lenders saying because you are 660 it will cost you 2% to get this loan. Thats a lie. The rate is the same give or take a couple hundred dollars.
16 years mortgage real estate exp
Trained FHA, VA, Fannie Mae, Freddie Mac Underwriter