Straight Answers on Which Loan Actually Costs You Less

FHA is more forgiving on credit — often down to 580 — and allows higher debt ratios, but it carries mortgage insurance for the life of the loan in most cases. Conventional needs roughly 620 or better, but its mortgage insurance drops off once you reach 20% equity. For a strong-credit buyer, conventional usually wins on total cost. For a rebuilding-credit buyer, FHA often makes the purchase possible at all.

When the monthly savings pay back your closing costs before you'd realistically sell or refinance again. If refinancing costs $4,000 and saves $150 a month, you break even in a bit over two years — reasonable if you're staying, pointless if you're moving next year. Rate drop alone isn't the test; the break-even is.

Twenty percent avoids mortgage insurance on a conventional loan from day one, but you don't have to start there. On a conventional loan you can request removal at 20% equity and it terminates automatically at 22% based on the original amortization schedule. Rising Quad Cities values can get you there faster than your payments alone would.

Typically 2% to 5% of the purchase price. On the Iowa side you'll generally pay less than the national average — no mortgage recording tax, and Iowa Title Guaranty rather than private title insurance. Illinois-side closings work differently and often run higher, which is worth knowing before you compare offers across the river.

I'm a mortgage loan officer with Key Mortgage Group's Quad Cities office in Davenport, Iowa, NMLS #631535, working with buyers and homeowners on both sides of the river.

Key Mortgage Group's Quad Cities office is at 5189 Utica Ridge Road, Davenport, Iowa 52807. I serve Davenport, Bettendorf, LeClaire, Eldridge, Moline, East Moline, Rock Island, Silvis and Milan.

The 15-year has a lower rate and dramatically less total interest, but a much higher required payment. The 30-year has flexibility. A reasonable middle path is taking the 30-year and paying extra voluntarily — you capture much of the benefit while keeping the lower payment as a safety valve if your income changes.

The rate determines your payment. The APR folds in lender fees to express the total borrowing cost as an annual rate, which makes it more useful for comparing offers. The cleanest comparison of all is putting two Loan Estimates side by side and looking at total costs and the actual monthly payment.

Fixed is the right default for most buyers — it never changes. An ARM starts lower and adjusts after an initial period, which can make sense if you're genuinely confident you'll sell or refinance first. But that's a bet on your own timeline, and timelines change. If you take one, understand the caps and the adjustment schedule.

An expedited refinance for borrowers who already have an FHA or VA loan, with reduced documentation and often no appraisal. The VA version is called an IRRRL. They're faster and cheaper than a standard refinance, but only available if your existing loan is already FHA or VA.

Sometimes, if your home has appreciated enough to put you at 20% equity. But on a conventional loan you may be able to request PMI removal without refinancing at all, which costs far less — always check that first. On an FHA loan, refinancing to conventional is usually the only way to shed the mortgage insurance.

Generally 2% to 5% of the loan amount, similar to purchase closing costs. Those can often be rolled into the new loan or offset with a lender credit — but understand that both of those mean you're financing the cost, not avoiding it. That's exactly why the break-even calculation matters.