First Time Homebuyer: FHA vs Conventional Loan
Dec 2, 2020
19 Comments
Hi all,
I'm a first time homebuyer purchasing a new build in Texas.
Purchase Price: $500K
Down payment: 20%
Credit: Good
FHA Loan 404K
Term: 30 years
Interest: 2.1%
MPI: $295/per month
Conventional Loan
Term: 30 years
Interest: 4.25%
MPI: $0
My lender highly suggest that I go FHA to get the low interest rate and re-finance in a year or so for a low interest conventional loan to drop the MPI. Although I'd have to pay an MPI, I'd save a lot on interest in the long run.
It would be great to hear your thoughts on this and what you think the best option is.
comments
For example, two loans with APR 3.0%, one with interest rate 2.95% and the other one with 2.2% and 0.75% insurance are not the same. The insurance is not amortized, it’s flat.