tl;dr

FHA

FHA is better for people with poor credit or who cannot make a down payment on a home
It is more expensive with the same down payment because of mortgage insurance ( $200/ m o n t h o n$ 420k loan)
Mortgage insurance survives the life of the loan

Conventional is cheaper, even if you can’t/don’t make a 20% down payment
- Requires mortgage insurance if less than 20%, but it is cheaper
- $56/ m o n t h o n$ 420k with 10% down payment
- $80/ m o n t h o n$ 420k with 5% down payment
Interest rates are higher but mortgage insurance on FHA closes the gap and then some

Talked to Scott about the trade-offs between

FHA is great for people who don’t have good credit or a big down payment
Can still get approved with a higher debt-to-income ratio
Advantages:
- Lower rate
Disadvantage:
- Upfront finance fee- 1.75% of the loan amount ( $5, 800 o n$ 420k)
- Mortgage insurance- $220/ m o n t h o n$ 420k for life of loan
Payment is higher and less equity
2.5% interest rate
Payment: $1, 570 n o t in c l u d in g t a x es an d in s u r an ce (v s .$ 1,394 with conventional)
Can do 10% down, even with a conventional loan
- Mortgage insurance of $56/month on $420k with 10% down ($1,600/month)
- Mortgage insurance of $80/month on 5% down
- Recommends 10% down on condo. With less, they have to do an intensive review