New FHA guidelines

You can't do a conventional loan?

I could do conventional, but I'd have to do either 10% down or do 75/20/5. Been told I can't do a 95% LTV on a condo unit (primary residence).

I've run the numbers both ways and I think I'd rather have the extra $7200 in my pocked right now for emergencies. That's the downpayment difference between 3.5% and 5% down.

Plus the second mortgage is going to be in the neighborhood of 7% so I'd want to refinance that along with the first within 4 or 5 year anyway.

I think I'd rather lock in the FHA rate for 30 years and just chunk down principal to get to 78% LTV after the 5 year min period. This way I don't have to worry about refinancing if I don't want to and have to worry about rates rising.

It's basically pay now or pay later I guess.

Just a random question. I had always been told you needed atleast 20% down to do a construction loan, how did you go about building with as little as 5% down. I had the urge to build a few months back but decided to wait until i had 20%. I would love to build with todays rates but am curious of the process with FHA and construction loans.

Should have qualified that statement.....builder is building the home/townhome. He has the construction loan, not me. I will be the end user once it's completed thus qualifying for the FHA route if I choose.

And yes, you are correct in that you do need 20% down to do a construction loan where you finance it yourself.

My words of wisdom is if you find a lot where you want to build, approach a builder to do the deal with. Let him purchase the lot and obtain the construction loan through his financing power with his bank and simultaneously sign a purchase agreement with him with a nice size deposit (negotiable). He'll add his builder's profit into the cost, but then you'll be able to walk in and utilize FHA financing at the end of construction since you will be buying the completed home from him.

Hope that makes sense.