FHA rates as compared to conventional near 620

[Anonymous]

My husband and I are looking to purchase a home on the west side of LA.

Purchase price 565,000
Down payment $165,000

eq fico 668
tu 657

My husband's is 643 eq
626 tu

Dti 33% mortgage/ 43% overall
Only one installmet loan for our business of $670,00
No other debt. Our cars are paid for, and we are PIF on our two cc's.

Fico has three lates from early 2009 on a student loan (husbands, now PIF)

I see on this forum that FHA rates are close to 5%. Is that a realistic rate, or simply unobtainable by someone like us with bad credut? The DTI figures above include MI and a rate of5.2%.However, if we have to pay6.5%, then the DTI changes, so I'm looking for guidance of real-life FHA rates.
..
Thanks!

[Anonymous]

couple things to check..

Are you under the FHA maximum sales price in your area?

not too many lenders will even look at conventional at 620 but the +20% down may work

3 lates from last year may also be a big issue (although again, the large down paymetn may be OK)

With the scores you are looking at, FHA rate will be as good or better than conventional.

[Anonymous]

Thanks for the quick reply. We are under both conforming limits and FHA limits.

I assume we'll have to go FHA and pay the 1.5% fee and MI for 5 years.

When you say FHA will be as good as or better than conventional, do you have a balloark of the difference in the FHA rate versus a strong hugh credit conventional buyer? Is the FHA rate with a 620 FICO .5% higher, 1%, 1.5%??

I spoke with a LO this afternoon, but I'm trying to arm myself with as much information

[BrianB_The_Loan_Professor]

First this would be considered a "jumbo fha loan amount" The rate will be adjusted as a result so 5% is probably a little low

However with the credit scores the rate along with the monthly MI will likely be more attractive than conventional.

Most lenders will not touch a 620 with conventional - if they do it has to be very clean

One bank I looked at uses a 3% (points not rate) adjustment for score at 620

plus a 1% adjustment for loan size - where with FHA it is .5% for score and 1% for rate

so

to compare

Par today would be 5.75% on a conventional

and right bwteeen 5.125% and 5.25% on FHA

Actually it looks like the cost in rate would be about the same when you add the MI in however in 5 years you could get rid of the MI on the FHA and have a great rate -