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FHA loan, closing costs really high

Hi all. My wife and I just got done with inspections on the house, the price is 353k(single family home) with 3.5k down. But now looking at the cash the close I am confused. My lender showed me two options, one where he would include the PMI in the loan and one where the PMI is in the closing cost. But in these both scenarios I see the PMI being in closing cost so I will give a breakdown to see if you guys can understand it.

 1st scenario 2nd scenario

Purchase price. $353k. $353k Loan Amount. $346k(PMI in Loan) $340k

Closing Costs A. Lender Costs. $1089. $1089 B.(includes PMI) $7654. $7654 C. $1384. $1384

D.(total loan cost) $10,127. $10,127

E. Taxes. $164. $164 F. Prepaid. $3,443. $3443 G. Init escrow. $4,350. $4350 H. Other. $415. $415

I. Total other cost. $8,372. $8,372

Total Closing cost. $18499. $18499

Cash to Close

Closing Cost. $18,499. $18,499 Down Payment. $6,395. $12,356 Earnest money. -$2,100. -$2,100 Seller Credits. -$8,500. -$8,500 Other Credits. -$1,800. -$1,800

 Total. $12,494. $18,455

Now my question is, why the PMI ($5961) is included in both closings costs when one is including in the loan? Why do I need to put 14k down instead of 3.5% down? Isnt 5.5% closing costs seem too high?

submitted by /u/knigh_trider
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source https://www.reddit.com/r/RealEstate/comments/1172ho7/fha_loan_closing_costs_really_high/
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