I suspect that, even though it felt like the mortgage person was just trying to get you to take his/her word for it about FHA, they were, perhaps, trying to save you from an unnecessarily long explanation about why this would be the best solution for you.
And, speaking as an agent, you do NOT want to change your financing in the middle of a transaction. It's in your best interests to pick one type of financing when you write an offer. The sellers will be potentially suspicious and could accuse you of changing your terms if you're still figuring out what financing you're going to secure during the course of the transaction.
I'd speak to your REALTOR and ask him/her for recommendations. It never hurts to speak to another loan officer to see if you get a better feeling from them.
1) Basically you have to choose which loan product you want to run with. FHA loans right now have much looser criteria for approval and the MI is approvable with the loan. Conventional mortgages have strict guidelines for credit requirements by which to obtain mortgage insurance. 1 point on your credit score can make MI invalid. His advice to take the FHA and go with it is not dubious - it is probably the advice that can make your life easier during the underwriting process.
2) The are only 4-5 main companies writing policies for mortgage insurance right now and I do not believe all of them write MI for 95% loans (yes, it is that tight right now). That is why FHA is so much more desirable. Not only do you not have to worry about MI approval, you also have the fact that the MI is cheaper per month plus your fixed interest rate does not suffer the pricing adjustments that a 95% conventional loan does. (FHA rates are around 5.00% while a 95% conventional loan may have a base rate around 5.75%)
3) You will not be able to lock your loan until you are under contract and have a set closing date. You should have a Good Faith Estimate and Truth In Lending Disclosure which will, at the very least, disclose to you your rate as of the day you registered the loan. Rates have not changed too much lately so your rate should be fine for now. However, it will float and adjust with the market until you lock so your safest bet is to get a home under contract.
I hope all that helps. Let me know if you have any questions.
Bank of America Home Loans