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Should I get a conventional loan or FHA with a 5% down payment?

I'm trying to purchase a home, what would be cheaper? Would I be able to get as low of a rate for a conventional loan with this size down payment? by RWilli_473_409 from Ballston Spa, New York. Oct 2nd 2012 Reply


William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,722 contributions

If you have excellent credit, income, and reserves, then yes.. conventional should be cheaper, however if you have a low credit score, or lower income which in-turn would result in higher Debt to Income Ratios, then FHA might be the better way to go.. FHA's rate will be lower, but overall payment will be higher.. if you want to know for sure, then the best advice I can give you is to contact a LOCAL mortgage broker and apply with them. Not the local "Big" bank, and certainly not one of those 50 states internet lenders...By applying with your LOCAL Broker, you have an advantage because he's familiar with local customs and works with numerous lenders, seeking out the best loan terms for your particular scenario. Because he has lower overhead, he can offer you lower rates and lower fees than most of the larger lenders.. He can also put together a side by side comparison with FHA and Conventional for you to see for yourself the differences... 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. 480-287-5714 WilliamAcres.com

Oct 2nd 2012
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Gene Neal (eneal@athccorp.com)
#31 ranked lender in New York - 273 contributions

You would receive a lower interest rate if you went FHA. However you wouldn't have the upfront mortgage insurance or monthly insurance payment. If you have the scores to qualify I would say you should go conventional. If you have further questions contact me directly.

Oct 2nd 2012
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Kofi Akpabla (KofiAkpabla)
#23 ranked lender in Connecticut - 37 contributions

conventional is cheaper monthly mortgage insurance AND no upfront mortgage insurance

Oct 2nd 2012
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Peter Traum (njlenderspeter)
#56 ranked lender in New Jersey - 16 contributions

If your credit score is high enough conventional would be the better way to go as the mortgage insurance will cost less and your payment will then be less. Your entire picture has to be reviewed to determine which is the best option. Our company is a top lender in NY/ NJ and we would be happy to review your application. Good luck.

Oct 2nd 2012
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Dan Paladin (dpaladin)
#1 ranked lender in California - 582 contributions

Short answer is YES if you have all the funds needed and your ratios meet conventional guidelines as your OVERALL payment will be less....your rate is higher with conventional though you save on the MI costs.....

Oct 2nd 2012
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Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#77 ranked lender in Florida - 2,240 contributions

We cover NY so if you would like to reach out to us we can run the numbers for you both ways and see what is a better option for you. 201-962-3555. Team@BestMortgageOption.com

Oct 2nd 2012
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