FHA vs Conventional Loan Question?

I am weighing out a FHA vs conventional loan. The reason I am even considering a conventional loan is because I cant seem to get any offer accepted in San Diego (I am offering 110 - 110% of list price). I keep missing out to ALL CASH offers and conventional loans...

If I went conventional with 10% down, and I pay PMI. How long before I can have my home appraised and if I have 20% equity can I stop paying PMI?

If I went FHA, how long after could I do an appraisal and if I have 20% equity and if the rates are still low could I possibly re-finance and then drop off the PMI?

The negative to FHA that I see is that I pay up-front PMI (1.75%) and that I have to pay PMI for 5 years even if I have 20% equity in my house.

The negative to conventional is that I have to come up with 10% to put down (minimum). If I put less, my PMI is crazy high and I can't do that.

Otherwise both loans are the same rate...

Any thoughts?

3 Answers

  • 1 decade ago
    Best Answer

    Are you working with a REALTOR? If not, then I strongly suggest you find a good buyer's agent and let him or her help you find what you want. If you are only looking at foreclosures then you are competing against investors who have cash and you will lose every time.

    Look at homes that are not in short sale or foreclosure and be willing to pay more. I know of a Florida agent who represents investors. He makes offers on multiple properties on behalf of his clients. If more than one offer is accepted then the buyer will withdraw his offer or even buy two properties!

    You need professional help and you should not be dealing with the listing agent.

    Source(s): FL REALTOR
  • 4 years ago

    FHA loans are NOT score based but use your last 2 years credit, employment and rental history. You MUST not have any lates at all in the previous 24 month period. Additionally, no bankruptcies in the past 4 years. FHA programs the property MUST pass an inspection as well. Older homes may not pass (roof must have 5 years life left etc) Your lender should explain ALL of this to you. With the lower down payment you MIP (mortgage insurance premium) requirement will be higher that is you put more money down 10%. So in theroy, the lower interest rate may cost you more monthly. Make yourlender show you side by side BOTH programs. Then evaluate your savings and monthly costs - pick the loan that best FITS YOU. Hope this helps.

  • 1 decade ago

    Your correct, when you enter a 10% cash interest the possibilities and endless.

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