Question about qualifying for an FHA loan

[StartingOver10]

If you have a LO, it is a good idea to speak to the LO to get an idea of closing costs for your specific geographical location.

Every area is a little different. In my area your closing costs and pre-paid expenses run about 4 to 5% of the loan amount on top of the down payment (we have high HOI costs). Using your example of $225k loan amount, if the seller pays 3% of the purchase price toward your costs, that means you would have to contribute $2k to $4k at closing on top of the seller's contribution at closing.

Maybe your area has less due at closing so you wouldn't have to bring in that much at all.

In conventional loans, the maximum amount a seller is allowed to contribute toward your closing costs and pre-paid expenses is 3% of the purchase price. FHA loans allow a maximum amount of up to 6%. Naturally a seller will limit the amount they want to contribute based on the market. If it is a sellers market where you are, then getting the seller to contribute at all is difficult. Be prepared.

[ShanetheMortgageMan]

With a 680-719 credit score, 5% down on a $225k sales price, your monthly PMI would be right about $158.53/mo.  With a 720-759 score it'd be right about $110.44/mo.  There is also no upfront mortgage insurance premium required on conventional loans.  Although you do have an option of paying an upfront mortgage insurance premium in lieu of the monthly amount (3.48% with 680-719 scores, 2.48% with 720-739 scores, 2.15% with 740+ scores).