Everyone asks, “What’s the cheapest way in?” The smarter question is, “What’s the cleanest way out?”
FHA gets the spotlight because 3.5% down sounds like a steal. On a $300K home, that’s $10.5K down. Conventional at 5% is $15K. Not a huge gap. The real difference is the monthly insurance. FHA’s mortgage insurance usually sticks for the life of the loan. Conventional PMI can fall off once you’re at 80% loan-to-value.
Remember, you don’t have to pay down 20% to get there. Appreciation, light renovations, or value-add upgrades can push your equity up way faster than the amortization schedule may lead you to believe. Hit 80% LTV, order an appraisal, lender verifies it, PMI gone. With FHA, you’re refinancing to escape MIP which means new fees (thousands), new rate, new terms, all at the mercy of the market.
Most first-timers ask, “How do I get in with the least cash?” If you plan to stack properties or hold long-term, the 5–10 year math and flexibility often favors Conventional. If you know you’ll sell in a couple years, FHA can be fine. But if it’s a newer asset in a high-growth pocket, and you might hold or add value, paying a little more up front to shed PMI later is how you move from surviving to compounding.
Carry on!
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