Many gain from new FHA insurance rules, but conventional loans are better for some

The Obama administration reports that by decreasing FHA’s annual mortgage insurance premiums by half a percentage point, as many as 250,000 new buyers will be able to purchase a home.

That’s fantastic information and overdue. FHA almost priced itself out of competition with giant investors Fannie Mae and Freddie Mac by raising its premiums several times in recent years. FHA made itself too expensive, and its market share has plunged.

1. If you have a FICO score well above 720 and you’ve got money for a 5 percent down payment and a debt ratio below 45 percent, conventional is probably your better bet.

2. But if your FICO is in the 600s and you have some complications to your application or debt issues, FHA will probably cure you kindlier.

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