Superflylinz,
There is also a GRH loan available in certain areas(Guaranteed Rural Housing). It depends if the property is eligible. If you and the home qualify, there is no down payment and you can get up to 6% in closing costs. There is no monthly mortgage insurance. You pay the mortgage insurance in an upfront fee which can also be rolled into the loan. It is a great first time home buyer program. It allows the buyer to put very little money out of their pocket.
If you need any more information, feel free to contact me.
The very best of luck to you!

Michael

Michael D Delp
Mortgage Pro
4802 Old Bethlehem Pike,
Telford Pa. 18969
Ph- 215-453-1025
Fax- 215-453-1012
Cell- 610-762-0318
michaelddelp@aol.com
michaelddelp@verizon.net
http://www.mortgagepro.instantlender.com

One more thing.... the downsides will depend on what you require for your goals and needs. For example, if the lowest monthly payment is your goal, then FHA would be the way. If you are looking for a lower down payment, then a Conventional program may be your program.
The major downsides I can think of is that FHA has a one time upfront Mortgage Insurance Premium that is added on top of your loan amount. However, if with this your monthly payment is still lower than that of a Conventional.
Basically it comes down to what your goals and needs require.

I need to correct some things that Terrance just posted.
1. FHA requires 3.5% down payment. They offer 6% sellers assist. They have the same if not lower interest rates than conventional programs. They also have lower monthly mortgage insurance compared to that of conventional programs. Once a FHA loan is obtained, they offer a streamlined refinance which allows you to lower your interest rate without the cost of an appraisal and little or no closing costs.
2. Conventional loans require a minimum of 3% down payment. And for the most part, they only allow 3% sellers assist, there are few instances where they allow more than that.
Hope this helps!

Conventional loan: Typically they want at least 10% down, interest rates are usually lower, some lenders allow for a 3% sellers assist toward closing costs.

FHA: Low down payment of 3%, interest rates are a bit higher, allowance for up to 6% seller's assist.

Terrence Charest, e-Pro®
REALTOR®
Century 21 Associates
905 Easton Road
Willow Grove, PA 19090
Cell (Preferred): 877.614.1494
Office: 215.659.5250
Fax: 215.659.5550
http://www.HomesForFreedom.com
tcharest@HomesForFreedom.com
“Giving to Those Who Gave”

Hello, thank you both for the advice! Could I ask, what's the biggest perk or potential pitfall of an FHA loan versus a conventional loan?

Good Morning!
I agree with Terrence that you should first obtain a reputable buyers agent that will educate you on the home-buying process and options that are available to you. With regard to the mortgage, PMI is added onto your payment when you do not have 20% down payment to contribute. The lender dictates what that monthly payment will be as well as your credit score, down payment amount, and the program you choose. For example, FHA monthly mortgage insurance is comparably less than a Conventional loan program.
The "points" you speak of are generally costs that are incurred when wanting to buy down your interest rate. Because these are closing costs, sellers assist may help pay for that cost.
Lastly, make sure you are choosing a program that will not cut off the amount of sellers assist you require. FHA allows up to 6% of the purchase price, where some Conventional loan programs allow only 3% of the purchase price.
If you have any further questions, don't hesitate to contact me. Good luck!

If you are not knowledgeable in negotiating, why would you do this on your own? Get a Realtor to negotiate your investment in a home. As for negotiating with a lender, that would be all on you. It is not uncommon to request for a seller assist from the seller to cover closing costs. However, the points must be paid by you in lowering the interest rates. Seller Assist is done through the Realtor when the offer is made, not the lender.

Get in touch with a buyers agent in the area you are wanting to look at homes in. They will be able to walk you through the whole process.

I hope that helps,

Terrence Charest, e-Pro