FHA or conventional 20% down?
What should I go with - FHA or conventional 20% down. As far as time frame on how long we plan to live here, I really do not know but hopefully long enough. I factored in the pros and cons for both FHA and conventional (such as PMI, discount points etc), but I am having a hard time coming to a conclusion. The only thing that scares me, as many would have figured, is further drops in price - how much and how long? This is in northern CA (Sacramento), if it makes any difference.
- falsi fiableLv 71 decade agoFavorite Answer
Rational answers do not play a part in fear. If fear is your motivating factor, choose the less fearful option.
If financial outcomes guide your decisions, choose the less costlier option.
FHA is 3% down, less money committed and available for other investments. Downside is PMI and higher rates.
Conventional w/ 20% down has more equity and better chance to get a HELOC or refi. But I doubt rates will ever go much lower than the 4.75%-5% we see today.
- jaffeLv 43 years ago
bear in strategies that the FHA would not supply loans. they simply insure third occasion loans. and because you're putting 20% down (which being a NYer, i understand is a hefty fee for a residence in NYC) you in all probability won't qualify for any loans insured by using the FHA. FHA insured loans are often for individuals who can not have sufficient money the coverage for their prevalent loan. and because you're a typical time homestead shopper and have no "hardships" well liked by a prior homestead, i think of you will finally end up with a customary loan right here insured by using a third occasion PMI. solid success, t
- IsabellaLv 41 decade ago
Not all homes are FHA approved or the sellers are willing to sell to a FHA buyer.
Pick conventional. Right now there are multiple offer on homes in California. You will have a much stronger offer with a conventional loan.
- 1 decade ago
if you can afford the 20% down I would go with that option. There's no sense in paying the PMI if you don't have to.