Mortgages: FHA vs CONVENTIONAL

7 FHA vs Conventional

FHA vs CONVENTIONAL: 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

  1. FHA stands (Federal Housing Administration) loans are available to all borrowers and are guaranteed by the government.
  2. The mortgage is issued by the bank, not the government,
  3. but the government ensures the loan against default.
  4. Getting an FHA loan is the easiest of all loan programs
  5. Credit score 580 for down payment of 3.5% of the purchase price.
  6. Can go to 500 credit score with 10% down
  7. Has the lowest interest rates of all loans.
  8. Requires MI – mortgage insurance for as long as you have the mortgage.
  9. The seller or lender can pay your closing costs.
  10. Have the highest debt-to-income ratio – you can afford more of a house.
  11. This is best for borrowers with average or poor credit or little credit items.

Conventional Loans

  1. The traditional loans offered to borrowers with the best credit scores.
  2. A 20% down payment is not required as many belief.
  3. Down Payment of 5%.
  4. For 1st time homebuyer is 3%.
  5. The minimum credit score is 620.
  6. The higher your credit score, the lower your rate.
  7. Sellers can only contribute 3% toward closing costs.
  8. You will need mortgage insurance if you place less than 20% down.
  9. Cannot have any missed payments or bad credit for 2 years plus to qualify
  10. Slightly higher rates than FHA.
  11. 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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