I am 25 and actively looking to buy my first house.  My realtor thinks I should look into an FHA loan.  I don't know all that much about them, but I can't stand the thought of using .gov assistance in buying a house especially when I don't particularly need it.  Can anyone knowledgeable on the subject give me some pros/cons to an FHA loan as opposed to non .gov aided loans?

How much of a down payment do you have?  You may not have much choice.  Conventional financing has gotten real tight in the last couple of years.

LOL no one is giving you money if I read your post correctly.

Id go do some reading. It seems that youve already got quite a lot of facts wrong.
The only people who will receive government aid are the lenders if someone defaults on their loan.

10% of my loan amount.  Credit rating 780-790 depending on what report.



You didn't. I was referring to the fact that other people would potentially pay for my mistakes if my screw my loan up and vice versa.










Yes, but in turn I could get a larger loan with less down and have to pay a premium for other people dicking up their loans.  Correct?



 

The fact that you're being steered to an FHA makes me think you don't have 20% down, plus closing costs and reserves.



I believe that FHA (insured) mortgages generally don't offer as good a rate as regular private funding, but tend to enable more people under the wire who private lenders might not lend to in the first place.



Typically, a good solid downpayment and excellent credit puts you not needing the FHA route.

Do you plan on keeping this house 5+ years?

In this area, at least, 5% down is enough for a conventional loan. I think it's 3.5% for FHA. You'll just have PMI tacked onto your monthly payment until you hit the 20% mark.



(We're about to start looking at houses, too. That's the only reason I know those numbers.)



 

Actually FHA mortgages require MMI (monthly mortgage insurance) vs. PMI (private mortgage insurance). Semantics and all. (Upon further review I may have misunderstood the post I quoted. If so please disregard.)

Also on a 30 yr FHA mortgage you will be required to pay MMI for a minimum of 5 years or until the loan is paid down to 80% loan to value based on original purchase price, not appraised value. The only exception is a FHA 15 year with 10% down which will not require MMI.

Lastly, FHA require an Upfront Mortgage Insurance Premium equal to 2.25% of the loan amount. This fee can be paid upfront or rolled into the loan amount (without affecting loan to value and whatnot).

With 10% down and excellent credit I don't think I would look at FHA. PMI should be less per month than MMI, the rate on a conventional should be a bit lower (although not by much) and it will be much easier to drop PMI on a conventional than MMI on an FHA mortgage.