FHA Loans vs. Conventional: A Payment Comparison
FHA Loans are a great option for many homebuyers. With only 3.5% down and flexible credit requirements, FHA can make home ownership easy and affordable. There is, however, an additional insurance cost that comes with the FHA program. What does that cost mean in dollars? Let’s compare.
FHA Loan vs. Conventional 30-Year Fixed
As you can see, even with the upfront $4,156 insurance premium, the interest rate and monthly FHA Loan payment is lower than conventional. Does this automatically mean an FHA Loan is the right choice? Not necessarily. Lots of factors should be considered before committing to a loan, such as how long you plan to stay in the home. With the above scenario, if staying in the home for two to three years, the conventional mortgage makes more sense, as no upfront premiums result in more initial equity. This should result in a higher profit when it’s time to sell.
In the end, the right loan program is usually customized to your circumstances and goals, so the best thing to do is speak with a lender before you shop for a home. For help determining if an FHA Loan is right for your specific situation, contact an FHA expert here or at 708-531-8388.