FHA vs. conventional mortgage?

FHA has an up front MIP funding fee and a monthly MIP fee. The up Front is on all loans no matter. Even if at say 81% loan on value at the point of close you will have the monthly for not less than 60 months. Standard MIP on 30 year notes just does not go away but is reduced over time.

Conventional notes have a monthly PMI fee if your loan exceeds 80% loan on the value. It normally will not drop off till you reach 78% loan on value but you can request it off with a new appraisal or when you actually get to 80%. The PMI rates vary as well as the MIP fees based on credit scores

FHA requires 3.5% down payment and conventional 5% on a purchase

The rates are pretty close to each other

I am a mortgage banker in TN

FHA is for those with small down payment and/or checkered credit.

Certain inspection issues have to be fixed prior to closing on FHA. These are largely safety issues inspector finds.

On conventional the inspection is totally at buyer's discretion plus any items found may be ignored by buyer or fixed after closing.

Interest rate and closing costs are higher on FHA. No one would voluntarily select FHA over conventional mortgage.

fha has a smaller down pymt available. a conventional is usually a lot more strict with all the demands put upon the borrowers credit

Pro: Much smaller downpayment (3-5% versus 20%), looser lending standards

Con: MUCH more red tape and hoops