Fha has just announced that the monthly mip will go up to 1.1% with 5% down payment and 1.15% with 3.5% down payment. The affect of this is that now it makes 5% down conventional financing more attractive than FHA financing.
As one of the few lenders who still have 5% down on conventional financing up to 417,000; I am going to point out the advantages and disadvantages of FHA vs. Conventional financing.
The advantages of FHA financing are.
- The down payment can be a gift and no reserves are required
- only 640 minimum fico is required
- allows non-occupant co-borrower
The advantages of Conventional financing are.
- Condominium financing with 5% down. With no more spot approvals FHA financing is no longer available on most condo complexes
- Option to buy Single Premium Mortgage Insurance and have no monthly pmi payment with 680 FICO on condos and sfrs
- 3% down with 720 fico. Not available on attached condos.
- Split Premium Mortgage Insurance with 3% down. This gives a much lower pmi payment than FHA MIP. Split premium works just like FHA UFMIP giving an upfront MI and then a monthly pmi payment.
- Can't be used on most condominium projects
- High monthly mip payment
- Need 680 fico
- need down payment plus 2 months reserves as own funds