FHA vs Conventional Loan?
I am a first-time home buyer. I just recently made an offer on a house, which the seller accepted. When I got pre-approved for a mortgage before house-hunting, I did not pay much attention to the various types of loans. I am not looking to see what type of loan I should actually apply for. From everything I've read, it seems that there are alot of benefits with the FHA loans that allow you to recieve assistance. Are there any points that make a 30-yr fixed conventional more attractive than a fha 30-yr fixed?
- glennLv 71 decade agoFavorite Answer
If you are putting 20% down then you would be foolish to go FHA because of the fees that are added to the loan. If you need to get into the house for the lowest possible money up front then FHA is the best way to go.
I read that you said "allow you to receive assistance". Be sure and remember the seller will consider your contract as binding. If you now think you can go back and change the contract so that it costs the seller any money you will need to offset that by giving him some more money in some way.
- 1 decade ago
FHA is designed for first timers who have less than 20% down. If you can get a conventional loan, its better and here is why:
FHA requires you to pay Private Mortgage Insurance (PMI or MI) simply because you dont have enough down. its a great route for first time because its hard for anyone to save up such a large down payment, and when your home reaches 20% equity, you can refi into a conventional loan and not have to pay the PMI. also, if you have no money down, you can ask for down payment assistance, but usually, sellers dont like that.
hope that was helpfullSource(s): "100 questions every first time buyer should ask" author: Ilyce Glick
- 3 years ago
FHA loans are no longer score based yet use your final 2 years credit, employment and condo historic previous. you may desire to no longer have any lates in any respect interior the previous 24 month era. additionally, no bankruptcies interior the previous 4 years. FHA classes the valuables might desire to bypass an inspection besides. Older residences won't bypass (roof might desire to have 5 years existence left etc) Your lender might desire to describe ALL of this to you. With the decrease down fee you MIP (loan coverage top rate) requirement would be larger it is you place extra money down 10%. So in theroy, the decrease pastime cost might desire to value you extra month-to-month. Make yourlender teach you factor by making use of factor the two classes. Then evaluate your decrease cost costs and month-to-month expenditures - %. the interior maximum loan that suited suits YOU. desire this permits.
- 1 decade ago
Most conventional loans today require a 10-20 percent downpayment. 2 years ago I would have advised you to go with a conventional loan, but FHA is the way to go in our current environment!Source(s): lender