FHA loan 3.5% Vs Conventional 3%

11 Replies

Quick newbie question: 

So with the FHA loan, you will still have to pay premium insurance throughout the life of the loan. Isn't that the same as paying the PMI for a conventional loan if you don't reach that 20% down?

If this is true, why do people give such a good word for FHA loans?

Thanks

Peter Bui 

Fha has Pmi for the length of the loan. 3 or 5 percent down conventional disappears when you reach 20 percent equity

@Peter Bui I personally prefer those but that’s just me.  FhA is a good way to go if you househack and can’t qualify for anything else but there are some downsides to it that no one ever really talks about.

1.  Higher interest rate, Pmi and picky inspection to start, usually higher closing costs to

FHA loans should only be reserved for those with marginal credit or for multifamily. The 3% down Homeready loan from Fannie Mae is a much superior product, assuming good credit.

Originally posted by @Russell Brazil :

FHA loans should only be reserved for those with marginal credit or for multifamily. The 3% down Homeready loan from Fannie Mae is a much superior product, assuming good credit.

What is the benefit of the FHA for multifamily over the 3% down conventional? All lenders are telling me FHA is too expensive and too much hassle . I want to do a duplex househack and likely roll repairs into a FHA 203k loan if that helps you understand my situation.

Originally posted by @Travis S. :
Originally posted by @Russell Brazil:

FHA loans should only be reserved for those with marginal credit or for multifamily. The 3% down Homeready loan from Fannie Mae is a much superior product, assuming good credit.

What is the benefit of the FHA for multifamily over the 3% down conventional? All lenders are telling me FHA is too expensive and too much hassle . I want to do a duplex househack and likely roll repairs into a FHA 203k loan if that helps you understand my situation.

You can not do a small down payment with a conventional loan. So the benefit is the loan down payment with FHA.

Originally posted by @Russell Brazil :
Originally posted by @Travis S.:
Originally posted by @Russell Brazil:

FHA loans should only be reserved for those with marginal credit or for multifamily. The 3% down Homeready loan from Fannie Mae is a much superior product, assuming good credit.

What is the benefit of the FHA for multifamily over the 3% down conventional? All lenders are telling me FHA is too expensive and too much hassle . I want to do a duplex househack and likely roll repairs into a FHA 203k loan if that helps you understand my situation.

You can not do a small down payment with a conventional loan. So the benefit is the loan down payment with FHA.

Sorry I'm not understanding . You can't do a small down payment conventional with a multi family ? Conventional is 3% down and FHA is 3.5%. is the kicker the fact that it's multifamily(duplex)?

Originally posted by @Travis S. :
Originally posted by @Russell Brazil:
Originally posted by @Travis S.:
Originally posted by @Russell Brazil:

FHA loans should only be reserved for those with marginal credit or for multifamily. The 3% down Homeready loan from Fannie Mae is a much superior product, assuming good credit.

What is the benefit of the FHA for multifamily over the 3% down conventional? All lenders are telling me FHA is too expensive and too much hassle . I want to do a duplex househack and likely roll repairs into a FHA 203k loan if that helps you understand my situation.

You can not do a small down payment with a conventional loan. So the benefit is the loan down payment with FHA.

Sorry I'm not understanding . You can't do a small down payment conventional with a multi family ? Conventional is 3% down and FHA is 3.5%. is the kicker the fact that it's multifamily(duplex)?

Low down payments for multis are only available with FHA. The 3% down conventional is only for single unit properties.

@Peter Bui If you are buying first property as primary residence you can purchase with 5% down payment under Home Possible for 2-4 units. FHA is good option if you have lower FICO and do no want to spend higher down payment. FHA has one more draw back paying 1.75% UFMIP fee of your loan amount .

Originally posted by @Russell Brazil :
Originally posted by @Travis S.:
Originally posted by @Russell Brazil:
Originally posted by @Travis S.:
Originally posted by @Russell Brazil:

FHA loans should only be reserved for those with marginal credit or for multifamily. The 3% down Homeready loan from Fannie Mae is a much superior product, assuming good credit.

What is the benefit of the FHA for multifamily over the 3% down conventional? All lenders are telling me FHA is too expensive and too much hassle . I want to do a duplex househack and likely roll repairs into a FHA 203k loan if that helps you understand my situation.

You can not do a small down payment with a conventional loan. So the benefit is the loan down payment with FHA.

Sorry I'm not understanding . You can't do a small down payment conventional with a multi family ? Conventional is 3% down and FHA is 3.5%. is the kicker the fact that it's multifamily(duplex)?

Low down payments for multis are only available with FHA. The 3% down conventional is only for single unit properties.

I appreciate you clearing that up for me. Thanks!