For home buyers who cannot afford to make a 20% down payment is it better to choose a loan program offered by the Federal Housing Administration or one from Fannie Mae or Freddie Mac? Laurie Goodman, director of the Urban Institute’s Housing Finance Policy Center, writes for Redfin that the answer depends on the buyer’s credit score.

The FHA requires borrowers to put as little as 3.5% down while Fannie and Freddie accept as little as 3%. When borrowing from Fannie and Freddie, the better your credit, the cheaper the insurance. At FHA, the price is static.

Here’s a big difference between the two: At Fannie and Freddie, home buyers who put less than 20% down must also buy private mortgage insurance (PMI), which protects those investors if the borrower defaults.

At FHA, the government insures the loans directly, charging a premium that becomes part of the borrower’s monthly payment. The program was designed to encourage mortgage lending to first-time home buyers, low-income borrowers, minorities and other underserved populations.

A buyer needs to factor in the cost of PMI when calculating the monthly cost of a low-downpayment mortgage from Fannie or Freddie. If you have a high credit score, you’re lower risk and your PMI – and your monthly mortgage payment — is lower.

At FHA, the fee doesn’t change. People with pristine credit pay the same as everyone else.

Borrowers should do careful math when choosing between the two programs.

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