Which loan is better for a first time buyer? FHA or Conventional?

FHA is somewhat more forgiving credit wise.If your scores are above 640 but below 700 or so then FHA should be better for you. This will also allow you to get a good rate.Mortgage insurance is required on all FHA loans and is generally higher the less you put down. Conventional loans require great scores and the mortgage insurance doesn't last as long as FHA and isn't required at all if your down payment is high enough.Call me in Cleveland for more details. 216 337 7520 Ray

In my opinion, generally, if your credit score is over 680-720 (ideally over 740) the conventional loan option is better because of lower PMI cost and NOT having the required 1.75% FHA upfront PMI which is added to your loan amount. The payment may not be much different but what you owe on the house will be less with the FHA option. On the other hand, FHA is much more flexible in getting higher DTI approved.

With the the my community program being brought back to 97% and with the reduced monthly MI on this program it might be the best bet. The truth is based on your loan amount, credit scores and income a mortgage pro will be able to identify your best option. There are income requirements for the first time home buyer programs on conventional loans as well. These reasons are why no one is just saying to go with this one or that one, but overall , typically if you can qualify for a conventional loan it will be the cheaper of the two, but again everyone's individual circumstances are different so the #'s need to be run on both.

Your condition is unique to you.. and without knowing your exact loan scenario, no one can advise you properly.. But in general.. if you have a high credit score, high income, low debt, and have sufficient funds to put 20% or more down, then conventional is the better loan.. FHA is typically for lower credit scores and lower down payment. Conventional MI is lower than FHA and is tiered based on your down payment.. the more you have down, the lower the MI premium. so even if you only have 5% or 10% down, conventional might be a better way to go.. .. but every case is different.. without knowing your profile, it's impossible to advise you properly.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com