Which one is Right?
The simple answer is: which one gets you the mortgage for the house you want.
Here are some key highlights:
- FHA stands (Federal Housing Administration) loans are available to all borrowers and are guaranteed by the government.
- The mortgage is issued by the bank, not the government,
- But the government insures the loan against default.
- Getting an FHA loan is the easiest of all loan programs
- Credit score 580 for the down payment of 3.5% of the purchase price.
- Can go to 500 credit score with 10% down
- Has the lowest interest rates of all loans.
- Requires MI – mortgage insurance for as long as you have the mortgage.
- The seller or lender can pay your closing costs.
- Have the highest debt-to-income ratio – you can afford more of a house.
- This is best for borrowers with average or poor credit or little credit items.
- The traditional loans offered to borrowers with the best credit scores.
- A 20% down payment is not required.
- Down Payment of 5%.
- For 1st time homebuyer is 3%.
- The minimum credit score is 620.
- The higher your credit score, the lower your rate.
- Sellers can only contribute 3% toward closing costs.
- You will need mortgage insurance if you place less than 20% down.
- Cannot have any missed payments or bad credit for 2 years plus to qualify
- Slightly higher rates than FHA.
- Most borrowers want to be here.
Don’t worry about the details, just get a good loan officer to get you the mortgage.
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