An FHA mortgage is a great product for a first time homebuyer to buy with as little as 3% down.
Generally, the term is a 30 year fixed loan and the rates lately are below 7%. An advantage of an FHA loan is the approval guidelines are easier than a traditional conforming loan. Another advantage is that you can do a streamline refinance in the future with limited documentation as long as you have a good payment history.
The monthly mortgage insurance that you pay because you are putting less than 20% down is less than it would be on a monthly basis with a conforming loan. The reason for this is because most of the mortgage insurance is financed up front in the loan amount which allows you to pay less monthly.
For the downpayment of 3% gift funds may be used. The loans require an escrow account which simply means the property taxes and homeowners insurance are paid monthly with your mortgage payment so you never have to worry about coming up with a tax payment at the end of the year.
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