Portal Forum General General Discussion Home Ownership Reply To: Home Ownership

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An FHA mortgage and PMI can be substantially more expensive than a conventional. Not just a few bucks more a month.

And as I remember it, if you get an FHA loan, you can’t remove pmi just by building equity. You have to make a certain number of payments before you can get it without refinancing.

This site seems to back that up.
http://blog.credit.com/2014/10/this-mor … ary-98077/

And PMI is not cheap.

Let’s use some real numbers.

Assume you’re buying a $200,000 house with an FHA loan. Your up front MI is $3,378 and your monthly MI is $136.71. Excluding taxes and insurance, your monthly payment is $1,046. Unless you put 10% down, your monthly MI is permanent. With at least 10% down, it goes away after 11 years.

A conventional loan with 5% down won’t have the up front MI, monthly MI goes away automatically once you get to 78%, and the monthly MI is around $115 per month.

FHA is not for the strong borrower with great credit and 5% down. It’s for the iffy credit scores or those who want to buy more house than they can qualify for conventionally.