Approved For FHA Loan

[Linsys]

I recently was approved for an FHA loan, apparently I was denied for a convention mortgage due to my scores being too low (660), which is odd since my Wal-Mart FICO is like 715. Anyway I was told with an FHA loan I would need to pay Mortgage Insurance for the duration of the loan regardless of LTV. Is that true? I thought MI went away once LTV was under 80%? If it is true can I refinance to a conventional 30 year and get rid of MI after a year or so. 

The only thing holding my credit down right now is I am using some "free credit" basically I have some 0% interest rate credit cards that I am using about $8k on, I have one 30 day late which was 2 years old in Dec, and that's it, no other collections (paid or unpaid), but due to my recent credit repair efforts on this site most of my credit is new including two car loans that are less then a year old. 

Possibly I need to wait 6 months?

Thanks.

[Hoya08]

Unfortunately the only FICO score that counts is the lender-pulled score... it's nice to have the WalMart-FICO to provide an idea of where you stand though.

As for PMI, FHA loans require PMI regardless of your LTV:

1)  If your LTV is greater than 90% (for both 15 & 30 year loans), PMI is required for the LIFE of the loan. 

2)  If your LTV is less than 90% (for both 15 & 30 year loans), PMI stops after 11 years. 

[StartingOver10]

Are you under contract already? If not, why don't you spend some time reducing your balances on your revolving debt so that your score increases to an acceptable level for a conventional loan?

Can you itemize your credit limits and balances so we can see where to best put your funds?

If you take the time now to pay down the debt, it will save you many thousands over the life of the loan in just PMI payments alone (many thousands). It is worth at least taking a serious look into the alternatives.