What is the downside of an FHA loan?
The main cost tradeoff is upfront and ongoing mortgage insurance. For a typical new 30-year FHA loan, annual mortgage insurance generally lasts 11 years with at least 10% down; below 10%, it generally lasts for the loan term. Property-condition rules can also narrow which homes work. I compare the cost over the time you expect to keep the mortgage.
What this actually means.
FHA's biggest cost is mortgage insurance — 1.75% upfront plus monthly MIP that, on most current FHA loans with under 10% down, stays for the life of the loan. That's the long-term cost. The structural friction: the FHA appraisal flags safety/condition issues that conventional appraisals don't, and many condos aren't FHA-approved. In tight Florida markets, listing agents sometimes prefer conventional or cash. None of this disqualifies FHA — but it's why running both lanes matters before you commit.
What this looks like on a real file.
Where this can move.
Credit score, down payment, LTV, expected hold period, mortgage-insurance economics, and property type can change which loan wins for your file.
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Educational only. FHA guidelines, lender overlays, rates, fees, and underwriting requirements can change. Final eligibility depends on full underwriting review. Mortgage Expert, Inc. is not affiliated with HUD, FHA, or any government agency.