20% down on a FHA loan, is there a down side? (insurance, interest rate)

[cavench]

Here are my understanding, please correct me if I’m wrong:

1. FHA loans has lower rate than conventional loans
2. FHA loan requires mortgage insurance only if down payment is less than 20%

So why would anyone go for conventional loan even when they have enough for 20% down payment? FHA should be the way to go for its lower rate, no? I’m sure there are critical bits of info I missed, please enlighten me.

[MikeyKid]

I believe FHA will still have MI for a set period of time even if you put down or get to 20% equity. In fact, I think the FHA MI costs just recently went up substantially.

[ShanetheMortgageMan]

1. Depends on all factors. Someone with a 740 score, primary residence, purchase, with 5% or more down & conventional financing should be +/- .125% within FHA interest rates.
2. The only time FHA doesn't require monthly mortgage insurance is at the time of origination there is at least 22% equity and you are taking a term of 15-years or less. Less than 22% equity, or mortgage with greater term than 15 years, the monthly mortgage insurance needs to be paid for at least 5 years and until the loan-to-value is 78% (22% equity).