FHA or New 5% Conventional Loan

[Ryan Smith]

Good Afternoon Bigger Pockets Member, 

I am looking to invest in my first rental property when I graduate at the end of December. When looking at possible financing options for the property, every book recommends FHA. However, I just became aware that on November 18th a new 5% down conventional loan will become available. I am having a tough time seeing the pros and cons of either method outside of the basics. I would assume the 5% conventional would be much better because it does not have FHA insurance payments every month hurting the cash flow. I have enough savings to cover either but would love to hear other opinions on what you think is the best plan moving forward. Thanks and have a great one!

[Mason Weiss]

I would advocate going with a conventional loan so you don't have PMI for the life of your loan. You should talk through your options with an investment friendly lender in your state so you can discuss specifics for your situation.