I have to say that I do not entirely agree with this assesment. Specifically, if you have good credit and income qualifications a conventional Fannie or Freddie loan is definitely your best option. That being said; what used to be considered good credit is now average or poor and what was considered great credit is now good. If your qualifications have not changed, you still may not qualify for the financing that you once qualified for.

There is some truth to what you say here; Fannie Mae just announced a few changes and implemented them immediately. For borrowers whom have a credit score of 719 or lower and are borrowing more than 60% of the homes value there are some new hits to the interest rate. Still if you have credit that is 680 or better conventional is still typically more competitive with regard to interest rate and you can still borrow 100% of the homes value VS. 97.75% with FHA.

The other consideration of course is PMI. You cannot borrower more than 95% of a homes value if your credit score is below 680 and still obtain PMI coverage. Without that PMI the lender will not issue a clear to close on the file and therefore FHA is a good option if you are not able to come up with a full 5% down payment and your credit score is below 680. Another nice function of an FHA home loan is that you can recieve up to 6% concessions or 3% concesions and a lender credit of 3% which will allow you to cover closing costs up to 6% of the homes value while only grossing the contract up 3% instead of the standard 6%. I recently wrote an article on the subject which can be read at 680 for 100%, FHA finally has a true purpose.... Thank you for your comment Nate, very insightful and brings up a great topic of conversation.

Sincerely,

Christopher Ohlsen