Conventional loan or FHA loan which is better for me?

Alot of people ask me which loan should I get. My answer is it depends on your situation. Both FHA & conventional loans are good loans.

Here are the main reasons to use either Conv. or FHA loan.

FHA- If you have lower income and want to put down only 3.5%. If your credit score is below 660. You have a lot of student loans on your credit report that are being deferred. You are using a co-signer who is not going to live in the house with you (non-occupant co-borrwer). You had a recent bankruptcy, foreclosure or short sale. You want to use a gift of 3.5% for your down payment. You are buying a multi-unit property 2-4 unit and you only want to put down 3.5% not 25%.

Conv.- You have good income and you have the minimum 5% to put down, or you can get a gift for the 5% down payment. Your credit scores are above 660. You are buying a condo that is not FHA approved. FHA has mortgage insurance for the life of the loan, conv has it until you have 20% equity in the home. You can also get a conv. loan with no mortgage insurance up to 95% loan to value. You can waive escrows up to 90% loan to value, FHA will not allow you to waive escrows.

Rates are better with FHA but you will pay higher mortgage insurance, therefore  your payment will be higher with an FHA loan providing you have good credit.