The FHA 203(b)
Benefits of an FHA loan
You might consider an FHA loan if;
The fixed rate option is typically lower than a conventional fixed rate loan.
What's not so great;FHA mortgages are “mortgage insurance heavy”, meaning the FHA requires that consumers pay both an upfront and monthly mortgage insurance premium. This premium is typically higher than Private Mortgage Insurance (PMI) required on a conventional loan with less than 20% down. In addition, an FHA loan requires mortgage insurance regardless of the down payment, and the monthly premium remains for the life of the loan. For a conventional loan, the PMI premium automatically drops off when a 78% loan-to-value is reached.
FHA mortgages are typically not for home buyers placing 10% down or more, or for those with high credit scores – conventional mortgage options like the Conventional Flex 97 represents a better deal for those applicants.
You should consider a Conventional loan if;