What FHA actually costs
FHA charges mortgage insurance whatever you put down, which is the main difference from conventional. There is a 1.75% upfront premium added to the loan balance, plus an annual premium collected monthly.
Put less than 10% down and that annual premium stays for the life of the loan. Put 10% or more down and it drops off after eleven years. Neither is a reason to avoid FHA, but both are reasons to compare it against conventional rather than assuming.
- 3.5% down with a qualifying credit score
- Compensating factors can offset a thin file
- Gift funds are allowed for the down payment
- Sellers can contribute toward closing costs
When FHA beats conventional
If your credit sits in the low 600s, FHA usually wins outright: conventional pricing gets punishing down there and FHA does not price credit the same way.
Above roughly 700 with 5% or more down, conventional often costs less overall because its mortgage insurance is cheaper and eventually disappears. The only way to know is to price both, which is what Jason does rather than steering you to one.
The refinance nobody mentions
FHA mortgage insurance is not a life sentence even on a life-of-loan policy. Once you hold 20% equity you can refinance into a conventional loan and drop it entirely.
In a market like DeSoto or Shelby County that can arrive faster than people expect. It is worth a conversation at the two year mark rather than paying it for thirty.
Questions people ask
What credit score do I need for FHA?
There is no single cutoff. FHA reaches well below conventional and compensating factors matter, so the honest answer comes from looking at your actual file rather than a number on a website.
Can I use gift money for the FHA down payment?
Yes. The whole 3.5% can be gifted by family, with a documented gift letter and a paper trail showing where the money came from.
Does FHA have a loan limit?
Yes, and it varies by county. The limits across the Memphis metro differ between Tennessee, Mississippi and Arkansas, so it depends which side of the line you are buying on.
This is not a commitment to lend. All loans are subject to credit approval, income and asset verification, property appraisal, and program guidelines. Rates, terms, programs and eligibility are subject to change without notice.
Get your numbers
Six questions. Jason answers personally, usually the same day.
Thanks — that is on its way to Jason. He will reach out shortly with your numbers.