Compare the entire payment
An interest rate alone does not tell you which loan costs less. Compare principal and interest, mortgage insurance, property taxes, homeowners insurance and applicable HOA dues.
Texas property taxes can materially affect the monthly payment, so estimates should reflect the actual property and available tax information.
Understand down payment differences
Some eligible borrowers can obtain conventional financing with a down payment as low as 3%. FHA financing commonly permits 3.5% down for borrowers meeting its credit and other eligibility requirements.
Not every buyer qualifies for the lowest down payment, and a lower down payment increases the amount borrowed.
Compare mortgage insurance carefully
FHA typically includes upfront and annual mortgage insurance premiums. Conventional loans with less than 20% down often include private mortgage insurance, whose cost varies with the file. The rules for ending insurance also differ.
For some borrowers, conventional insurance may cost less or be removable earlier. For others, FHA's overall qualification structure can be more appropriate.
Evaluate cash needed to close
Closing costs, prepaid taxes, insurance escrows, seller credits and any assistance programs can change the cash requirement. Compare Loan Estimates for the same property and assumptions.
Ask for an apples-to-apples breakdown, including annual percentage rate where required, rather than choosing based on a promotional rate.
Frequently asked questions
Is FHA only for first-time buyers?
No. FHA eligibility is not limited to first-time homebuyers.
Is conventional always better with good credit?
Not necessarily. You need a file-specific comparison of approval, payments, mortgage insurance and total costs.
Discuss your mortgage options
Every loan scenario is different. Sarah can help review eligibility, program terms and tradeoffs for your situation.
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