Is an FHA home loan worth it if I can put down 10%?

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Posting as :
works at
You are currently posting as works at

What are your concerns?

Higher insurance rates? Or the bank making up a lame excuse not to approve me?

What?

Higher total mortgage insurance costs. Borrowers pay a monthly FHA mortgage insurance premium (MIP) and upfront mortgage insurance premium (UFMIP) of 1.75% on every FHA loan, regardless of down payment. A 20% down payment eliminates the need for PMI on a conventional purchase loan.

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Really people buying houses atm? Thought it was mostly investment firms paying 50k over asking.

Not in the real world ...

smart

Find a mortgage broker to run the numbers for you. With interest rates as low as they are, you should be able to get a good deal on a 10% down conventional loan and get a lower total payment than FHA. It’s really hard to get rid of FHA mortgage insurance without refinancing, and all the evidence points to rate increases in the next couple of years, so you’re better off with that lower rate on a 30, 20, or 15-year fixed rate conventional loan now vs. gambling on refinancing later to get rid of mortgage insurance when rates are going to be higher.

There are likely FHA required inspections and contingencies that make a buyer using FHA less desirable.

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