That said, I am trying to flip my clients to Conventional loans. It has nothing to do with their purchase power and everything to do with saving them money. The combination of the upfront MIP at 1.75% and monthly mortgage insurance at 1.25%....and going to 1.35% shortly...just make it a no-brainer to go Conventional if at all possible. The private mortgage insurance is easily 30 - 50% less than FHA.
Topping that off, in April the monthly mortgagae insurance on FHA become permanent for the life of the loan. Essentially, every home buyer using FHA should be looking at an exit strategy to get into Conventional financing asap.
All my best,
Most first time buyers have at least 20% down, if not 50% or more. They're coming up against heavy competition from trade-up, investors, and foreign buyers with all cash bids.