FHA insured loans have been a big part of preventing further economic collapse
in 2009 on, and enabled so many first time buyers or second chance home buyers
to buy their own homes. This was timely as subsequently conventional lending requirements tightened up to such an extent that it could have kept most first time buyers out of the home buying marketplace.

Recent changes were made by FHA in lending requirements and more
are likely on the way. While Congress pushes the Feds to do so in the
face of larger than anticipated home loan payment delinquencies and foreclosures,
FHA lending remains crucial in keeping open a pathway for people to purchase their own homes, that otherwise could not.

In spite of hefty increases in the monthly mortgage insurance fee, I think an FHA
insured loan will remain the best option for most who need to make as small
a down payment as possible, and have a limited or challenged credit history. The door is now more open for anyone with very good to excellent credit and having just a little more for a down payment to consider conventional loan over an FHA loan.

As a mortgage consultant who works for a direct lender who was listed no. 7
in the number of FHA loans funded in the country last year, I admit some bias. However, I really think it is very important to compare your conventional loan options so you can
make a truly educated decision. FHA requires a minimum 3.5% down payment, but
with 5% down you may be able to qualify for a conventional purchase loan.
Now that there is a significant monthly savings in mortgage insurance over the FHA loan,
it is well worth taking a look at your conventional loan options.

On a conventional loan, with very good to excellent credit you ought to be able to get a rate pretty close to the FHA rates. If your credit is fair to good you probably will get a far better rate with FHA. The key is to see the total monthly payments from both types of loans side by side (i.e. monthly principle and interest plus property tax plus homeowner's insurance) and see how they compare. Another helpful benefit with an FHA insured loan is FHA allows credit from the seller, lender, and realtor to be applied to settlement costs (interest, property tax and insurance impounds,) as well as traditional closing costs. With a conventional loan they can be applied to traditional closing costs only.

With a conventional loan you can buy down your mortgage insurance monthly payment even lower. With FHA the mortgage monthly insurance payment is set. You have some pretty good down payment assistance programs you might qualify for with an FHA primary loan. There may be some available with certain conventional loans. It is very important you set up an appointment with an experienced mortgage loan consultant in FHA insured loans and conventional loans, by phone or in person. You can find out what you qualify for in both categories of loans. That is such an important first step on your way to saying good bye to landlords and becoming a proud homeowner!