Which is better...conventional or FHA loan?

I am a 1st time homebuyer. My husband wants the conventional loan b/c we can pay our taxes and insurance in one lump sum once a year. I like the idea as well b/c it lowers our monthly pymt every month, and we can use our bonuses, etc to pay our taxes. I just dont know which one to go for.


My credit score is about 650, I believe. I am been approved for both types, but with two different mortgage companies.

6 Answers

  • 1 decade ago
    Favorite Answer

    I would go conventional. There aren't as many guidelines to follow, there's a little less paperwork involved, and it's a bit speedier.

    Source(s): 5 years real estate and mortgage experience
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  • PatV
    Lv 6
    1 decade ago

    Mortgage payments only go up so be cautioned - if you are already trying to find "lower mortgage payments" you may want to reexamine what you qualify for.

    Whatever the bank tells you the amount you qualify for, do not buy at the high range. Your realtor may encourage you to use what you have, but you need to be prepared for lots of costs as a homeowner.

    If you can afford a $900 monthly mortgage payment, be prepared to pay 1/3 more. Just the move-in costs alone add up to that easiely.

    The previous answer by Kaz explains the differences between the loans. These are things both your realtor and a mortgage broker should sit down with you. If either isn't too forthcoming, find someone else. They both earn money off what you spend! So neither is an objective participant.

    Read Robert Irwin's books on buying/selling.

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  • 1 decade ago

    First of all, I am not too sure why so many people are so down on FHA. Secondly, judging by the answers from most of the people that have answered your question, they literally know nothing about government lending.

    First of all, FHA is NOT just for people with low credit scores. FHA loans are for people would would like to save money and get a good mortgage secured by the federal government.

    Believe it or not, the PMI insurance, otherwise known as MIP on FHA loans, is much cheaper than conventional mortgages. You are able to pay less money, sometimes no money up front on the loan and they are not any harder to get done than a conventional mortgage is. The loan officer and his/her support team just needs to know what they are doing.

    The mortgage insurance absolutely does NOT stay on the loan forever. Although, you are required to keep it for at least five years.

    Conventional lending will only allow up to 95% financing, whereas FHA will allow 97% financing AND you can use down payment assistance programs for the 3% down payment. You do not have this potion on conventional loans.

    Finally, FHA does not have the requirements that they used to have. Honestly, when I do FHA loans, the requirements are practically the same, and sometimes less.

    If you would like more information on this, please feel free to contact me at timothy.kazee@americanhm .com. Good luck in your journey!

    Source(s): I am a Residential Mortgage Specialist with American Home Mortgage, traded on the NYSE and licensed to lend in ALL 50 states.
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  • 1 decade ago

    Iwould go with an arm, on an fha you will have to pay insurance for the life of the mortgage reguardelss of your credit. I would go with an arm right now because rates are gonna go down very soonn and you dont want to be fixed. There are tons of write offs you can use on a conventional loan, so I would stick with that, fhas are generally for people with poor credit.

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  • 1 decade ago

    FHA is the best way because if something goes wrong you have a better risk coverage for a longer time.

    About FHA loan (FHA insured loans)


    Source(s): Check my house mortgage and loan blog: http://house-mortgage-and-loan.blogspot.com
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  • Anonymous
    1 decade ago

    conventional will suit you better. really depends on what your credit scores are

    Source(s): loan officer
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