Home Loans- USDA, FHA or Conventional? Which did you go with?

[tonyguitarguy]

Currently looking for our 1st home. Wanted to hear from you guys on what kind of loan you did and any pros/cons to help me make my decision.

[JayB]

The more you can put towards the down payment, the better. USDA will get you 100% financed with little $$ down, but a higher payment. FHA will get you a loan with 3.5% down, but a higher monthly payment. 20% down will get you a better /loan amount and a lower payment, but you spend that 20% in cash.

You need to talk to our very own loan specialist on TBH, Trey Powers.

[tmurray]

Depends on your situation really, I bought my 1st (only) home almost 11 years ago with a FHA loan at 3.5% down. I got a 5.75% interest rate back then. The value of the home went up over the first few years and we refinanced on a conventional 15 year loan around the 5 year mark. Had to come out of pocket about $12k to meet the 80/20 loan requirements but it was well worth it. We now have a 2.875% interest rate locked in and almost the same monthly payment as the original FHA loan.

Obviously it's best to purchase on a conventional loan with at least 20% down and a 15 year note if you are looking at how to pay the least amount of interest. Plenty of folks will say that if you can't afford to do the above, you are buying outside of your means. I personally don't regret my decisions at all. I was able to get into a house at 24 years old and start building equity. If I was still in that original loan, I may feel different but getting my foot in the door (pun intended) allowed me to start building that equity while basically living on the same monthly budget. I was paying about $1200 a month for an apartment and my mortgage payment was about $1350 a month. Plus new homes are way more efficient than apartments. My increased "rent" was mostly offset by an electric bill that went from $250 a month to $120.

Moral of the story, just don't put yourself in a position to be house poor.

[Texastaxi]

PMI is also a consideration if you put down less than 20%.

Double check this with a loan officer, but PMI used to drop off, once you reached 20% equity. I think now, you have to refinance, to get it to drop off.

[LukeDuke]

Agree with everything above, and I would add:

20% down let's you skip PMI insurance which further reduces your payment.

It also let's you pay your taxes and insurance out of pocket on your own instead of the lender collecting it monthly. Personally I like to hold on to my own money.

USDA is only available in certain rural areas.

[M16]

Check with your locally owned hometown bank. Very easy process.

[wes122984]

There are better programs than those government loans listed. Boa is offering 7500 or 10k towards closing cost/down payment assistance depending on your area and or income. Also programs for 3% down no pmi etc.

[mikemorvan]

Get some professional advice on they type of loan you get. Also try to stay w/ a 15 year fixed rate term. Bite the bullet, establish your budget, and make it happen. Paying it off sooner will make life much better later.

[topduarte]

RBFCU. Lowest rates.

[McBar]

You can go conventional with as little as 5% down you dont need 20% (obviously the more you put down the less financed and therefore lower payment/less interest overall). PMI (private mortgage insurance) will be carried with the life of the loan on an FHA while once you hit 20% in equity on a conventional you can call your lender and have the PMI payments removed (used to drop off automatically not sure if it does any more but keep an eye on home value and equity so you can call and get it taken off earlier

[bowhntrmatt]

I did FHA on my first home and conventional on every other one since (3). FHA was good starting out when I had just entered the workforce and didn't have the 20% to put down, but it was an absolute pain when it came to paperwork and documents compared to conventional, plus you have PMI that doesn't go away.
A loan officer that offers all these products might be able to steer you in the right direction with the knowledge of your exact situation.

[dclifton]

Bought a house in early 21. With an FHA loan let a mortgage lender talk me into it... Bad idea as my house value increased enough in 8 month i could have refi and covered the 80/20 split pretty much just in equity and what we put into the remodel cash... But by the time i got around to pursuing a refi with Trey Powers it wouldnt save me enough to justify the headache as interest rates had gone up to much by then they absorbed just about all the PMI saving i would cut out.


I would strongly suggest you call Trey Powers and get him to fix you up with a conventional loan. He helped me out tremendously after the fact with info and honesty. Should have used him from the start.