FHA or wait for Conventional loan (loan officer, 401k, pre-approval, credit card)

[SAgosto]

I made the mistake of starting to house hunt about a year early assuming it would take me a long time to find what I want. To my surprise, we found a fantastic house for $550K in Rockland County (NY) which is in the FHA's "High Balance Loan" area. We both have credit scores of 800+ and qualify for a higher purchase price ($700-800K). Unfortunately, our funds are depleted from the wedding and we only have about $45K down payment. Per both brokers, the additional closing costs would be $26,500 (4.8% of $550K) and would not be covered even with 3% seller's concessions. The current home owners aren't negotiating much with us and the listing agent even commented on the 5% down so I cannot assume seller's concessions even though it shouldn't affect them.

I have a pre-approval from a local mortgage company for $550K with 5% down. We shopped around and spoke to a rep from Wells Fargo who told me that $550K conventional loan with 5% down is not possible (10% minimum) for any loan about the $417K. My questions:

1) It sounds like the consultant from the local mortgage company is incorrect unless it is possible their bank isn't using Fannie/Freddie? Is that typical?
2) I need to wait to save more money to cover the entire 10% and the $26,500 closing costs. We'd lose the house.
3) Go FHA. The up front MI of about $9K and the monthly MI of about $520 (~$250 for conventional) absolutely kills it for me

I can't think of any other options. We have EXCELLENT credit, $250K+ yearly income, $0 credit card debt, bought/repaid multiple cars in our life, and *NEVER* miss a bill and yet find it so hard to buy a house. I am not sure what to do.

[Debsi]

1) I don't know about typical, but it's possible they sell loans to another investor. Ask the loan officer who they sell their loans to or if they portfolio them (lend their own money).
2) Do you have a family member that might gift you the money?
Is a 401K loan a feasible option?

[SAgosto]

Originally Posted by Debsi

1) I don't know about typical, but it's possible they sell loans to another investor. Ask the loan officer who they sell their loans to or if they portfolio them (lend their own money).
2) Do you have a family member that might gift you the money?
Is a 401K loan a feasible option?

The mortgage company doesn't typically deal with $417K+ loans so I am concerned they might not know this 10% requirement but I can't imagine how it would be missed.

I prefer to not borrow from any family member but it IS possible.

I could borrow against my 401K and probably still have the required PITI reserve. I am not sure where to even begin to understand the details including fees, etc.