In that matchup, the no-PMI conventional ARM usually wins on cost. With FHA, even at 5% down, you pay an upfront mortgage insurance premium (1.75% of the base loan amount under FHA's guidelines, which you can finance into the loan or pay in cash at closing) plus monthly mortgage insurance for years. FHA sets those premiums, so confirm the current figures. Between the insurance and the rest of the pricing, the all-in monthly cost of the FHA option in a comparison like this can run several hundred dollars a month higher than a conventional ARM with no mortgage insurance. Treat any specific dollar gap as one scenario's math, since your rate, price, and credit move the numbers. Why we like the seven-year window: - Seven years is a long, defined runway. Plenty of time for equity to build and to refinance into a fixed rate later if you want one. Nobody can promise where rates go, but the window gives you options. - You can defuse the adjustment yourself. Take the monthly savings from skipping FHA mortgage insurance and set the money aside. Over seven years that banked cash can pay the balance down or recast the loan before the fixed period ends, so the adjustment does not catch you exposed. The right call still depends on your numbers and how long you plan to stay. We can lay the ARM and the FHA option side by side on total cost so you choose from real figures.