Investor · Baltimore, MD · Member since 2015 · 123 posts · 38 votes
Would it be best for my first deal to be though a FHA Loan Or with a Conventional Bank Loan? I know with a FHA Loan I would have to live in the property for a certain amount of time, plus the Down payment is lower 3.5% I believe. I don't know the full details with FHA loans. Any Suggestions?
@Charles Brumfiel That's a good amount of savings. Good Credit with a 3% conventional loan sounds like a better rode to travel. Thanks Man appreciate it
If you qualify, I would recommend the 5% down conventional vs FHA(Assuming you're going to live in it for the next year or two). That's what my wife and I just got on our home purchase. If we were buying property different that the one we were already renting and living in, we had talked about buying a duplex and living in half. It's a great way to get started in investing. MI drops once you're below 80% LTV. If you pay extra the first few years, it goes away quickly.
FHA closing costs tend to be quite high compared to conventional. We did the math, and 5% down conventional and paying 50-100 extra principal every month to get rid of the MI sooner works out much better than less down. We just had to save longer to have cash to close. Well worth it. Plus they didn't have to look at my wife's (non) income or her (erroneous) credit, only mine. FHA they look at EVERYTHING.
The FHA fee on my itemized worksheet was $1688 so I saved paying that by going conventional. Between just the down payment and the FHA fee I saved $2141.50 in upfront costs.
No problem Dwayne, I hope you get an awesome deal and an awesome loan!