So, I've heard a lot about FHA loans, ARMs, traditional mortgages, etc. I understand ARMs are basically terrible, and I will not do an ARM. I will only do a 30-year, fixed rate, the way things were done before the market crashed. But what's the consensus on FHA loans? Good, bad, neutral? Are these fairly new, and part of what contributed to the housing market crash? I have a 770-790 credit score, depending on bureau. I've had 5 loans through my credit union (auto/unsecured personal), and a couple credit cards, one being a Visa through said credit union. I'm 27. In other words, I have high credit due to actual good credit history and usage of credit, not just from having one credit card and never messing up (I know a lot of people with high credit scores but they just have them mainly because they've never actually utilized credit beyond maybe one credit card they rarely use). 20% down just isn't likely going to happen. I know it's best to avoid PMI, and not be upside down on a house that potentially ends up sliding in value these days, but at this point in life 20% isn't realistic unless we drain all of our savings and then some, which we can't/won't do. So let's remove that from the current topic, as I'm only soliciting advice on the difference between FHA/conventional mortgages here, with an equal amount of money down. We can do 5% down on a house. In my research between the differences of FHA/conventional mortgages, I found this: http://www.bankrate.com/finance/money-guides/differences-between-fha-and-conventional-mortgages.aspx It seems that the primary difference is the way the mortgage insurance is handled, being that you pay PMI until you get to 20% equity on a traditional mortgage, whereas with an FHA you can put only 3% down but must put down 1.5% of the home's value for insurance at closing, and then .5% annually for the entire 30 years. To me, it seems like the FHA loan is a bad deal, because that's a lot of money going to insurance. I know FHA loans are popular now because a lot of banks have cracked down and require the 20% down payment for a conventional mortgage like the old days, but let's say I can get a traditional mortgage with 5% down based on my credit score/history. In that case, is there ANY reason why I would want to take an FHA mortgage vs. a conventional mortgage? In other words, downpayments equal (5% in both cases), is there any reason to take an FHA mortgage over a traditional mortgage if I could be lucky enough to get a traditional mortgage with a good rate? My gut says no, take the traditional mortgage no matter what. But I've just started looking at FHAs and really am not sure what the general consensus is; I'm kind of old school, so to me anything but a traditional mortgage seems like a bad deal.