lucky_ducker t1_iyd35ib wrote on November 30, 2022 at 2:42 PM

$800 month principal and interest payment on a $96500 loan is a rate of 9.35%, much too high given your credit score and the current mortgage market.

However, you're putting down less than 20% on an FHA loan, so you are going to be paying Mortgage Insurance Premiums (MIP), the FHA equivalent of PMI (Private Mortgage Insurance), and that may account for the difference. MIP on FHA mortgages stays for the life of the loan, there's no way to have it removed short of fully refinancing.

MikeWPhilly t1_iyda0qu wrote on November 30, 2022 at 3:30 PM

Was going to write a post but Lucky has. It’s more that’ll likely the MIP. Which is probably $150 or so a month. So that’s likely the difference maker. Also lucky’ s point about not being able to remove the MIP is a key piece of info. $100k is really not much a house in most parts of the country (or even condo) without knowing what home price ranges Op is looking at it’s hard to make any recommendations but realistically OP might be better off with a traditional and 20% down. Hard ot know what starter homes go for with no info. Eldengames - what how price range are ou looking at?

Eldengames OP t1_iydahin wrote on November 30, 2022 at 3:34 PM

I'm thinking of getting a new job here shortly and I'm probably expecting to move my income up to around 60-70k. We just wanted to move first because my wife and I currently drive (carpool) 45 minutes to work. Is a conventional loan something I should look into instead? Or can I refinance into that later?

They did offer the ability to refinance on their dime as long as its within 3 years so that would fit my time line for a new job and my wife's credit score should recover as well. Do conventional loans have MIP?

lucky_ducker t1_iydjwv0 wrote on November 30, 2022 at 4:37 PM

Conventional loans (generally) require the equivalent PMI if your down payment is less than 20%. Most of them allow you to drop the PMI once your loan balance is less than 78% of appraised value, or in some cases, the original purchase price.

I originally financed FHA in 2007 (only did 3.5% down) and in 2020 refinanced into a conventional loan at 2.5%. No PMI or MIP now.