FHA vs Conventional PMI (5% down)

[Bryan Pham]

Hi BP,

I am about to purchase a property and is given two options by my agent. One is do a FHA loan with 3.5% down on a property with an additional 1.75% for the MI upfront or do a conventional loan with 5% down. I am not sure if by doing a conventional 5% loan, will I be faced with the same mandates as the FHA loan where I must live in the property for one full year? Does anyone on BP know the answer to this? Thank you.  

[Russell Brazil]

Originally posted by @Account Closed:

Originally posted by @Bryan Pham:

Hi @Russell Brazil Will I still be restricted to live in the property even though this is a conventional loan instead of a FHA loan?

 No, conventional loan means 20 to 25% down, not requiring you to live in the property,did that answer your question?

 This is incorrect. Conventional loans are available to owner occupants with as little as 3% down, and to investors with as little as 15% down. A conventional loan means it meets conforming standards so that Fannie Mae will purchase the loan to package it in a mortgage bond. Interest rate pricing is different for owner occupants and investors. If you purchase using an owner occupant loan you will sign the same occupancy affidavit.  If you use an owner occupant loan, then do not occupy the property that is mortgage fraud.