The forgotten loan. Everybody is leaning toward FHA loans these days due to the lower down payment and easier credit standards. However, there still are many circumstances in which this loan is the right choice for you. Basically if you have excellent credit (740 mid score and above) and have 10% or more to put down the benefits are:
• a slightly better interest rate
• avoiding the Up Front Mortgage Insurance fee that all FHA loans require. This is 1.75% of the loan amount. That can be a significant savings.
• if you put 20% down, you can also avoid paying the monthly PMI that you will have to pay when taking out an FHA loan. You will have to pay the monthly mortgage insurance for an FHA loan even if you put 20% down. Not so with conventional loans.