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Should I do FHA or conventional when I have more than 3.5% downpayment?

I want to buy a home for $144,900. I have up to $13,000 available for a downpayment. I was told that if I have more than 3.5% to put down, or more specifically, 5%, then I should not do an FHA loan and instead elect for a conventional loan. I have a great credit score and want the correct balance of a low monthly payment but also not "throwing money away". What is the smarter way to go? I appreciate any help! by samant_767_969 from Chesterfield, Missouri. Apr 21st 2012 Reply


James Barath (JamesBarath)
#9 ranked lender in Indiana - 351 contributions

Whether you choose an FHA Insured Home Loan or an Insured Conventional Home Loan, the question you need to ask yourself is would you rather have a lower monthly mortgage payment or cash in the bank that you could offset your monthly mortgage payment as needed. Many consumers initially want a lower monthly payment; however, because the amortization of whichever home loan you choose will most likely be over 30 years you would need to put a substantially large down payment to significantly reduce your monthly payment. As a Certified Mortgage Planner, I generally advise you to keep as much of your own money liquid as possible. Congratulations on exercising your right to home ownership!

Apr 23rd 2012
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robert brown-farley (brofarops)
#14 ranked lender in Missouri - 15 contributions

I WOULD Elect the CONVENSIONAL for many reasons. R&Rs are less strengent for one. Interest Rates are better for two. And with "Great Credit" you should have no problem locking in a terific mortgage. Good Luck.

Apr 21st 2012
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Andrew Ojeisekhoba (andrew@pmcmortgageloans.com)
#413 ranked lender in California - 3 contributions

You should do a 5% down conventional loan with no MI.Call me with questions800-385-3657

Apr 21st 2012
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Jeremy Davis (JJDavis918)
#24 ranked lender in South Carolina - 9 contributions

FHA loan is not only one lowest rates but also has some great terms. The money you save on the down payment can go toward upgrades. Some upgrades such as Energy efficient ones will help you qualify for tax credits.

Apr 21st 2012
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