FHA compared to Conventional?
I am in the market to buy a house. The problem is, i won't have 10% to put down.
My credit score is around 760 give or take a few points. Never late my entire life. this includes automobile payments, student loans, a couple unsecured loans from my bank, and multiple credit cards (which have been paid completely over the years)
So, i hear the FHA loan only requires 3.5% down. compared to Conventional which requires 10%.
What is the difference between these loans, besides the down payment, or is that it?? i also know they have to inspect the house to make sure it's liveable.
basically, is one better than the other or are they the same. If the conventional loan is better, is there a way to get it with less of a down payment than 10% (looking at my credit history)????
PLEASE HELP!!!! :)
- loanmasteroneLv 71 decade agoBest Answer
First of all FHA does not make loans, they guarantee the loan, so if for some reason you are unable to pay your monthly mortgage to the lending institution HUD would pay the lender off and take the property as a HUD foreclosure. Thus the lender would not have any liability.If you pay the loan off as agreed or refinance the house nothing happen at all.
FHA loans though are partially driven by the credit score other things are taken into consideration and the down payment is less. Of course you can pay more down, but why would you?
FHA requires the house to be in a livable condition prior to mortgage loan approval, therefore any discrepancies found in the property have to be repaired prior to occupancy and final loan approval.
Some arrangements might be made to accommodate the repairs, but they must be satisfied in some way. Funds might even be held in escrow until the repairs are made.
In a few of the FHA mortgages the seller might be required to pay a more substantial portion of the closing cost.
Conventional lenders only prove the value of the property by getting an appraiser, it is up to the buyer to obtain a home inspector at the buyers expense unless the seller agrees to do so in the sales contract.
I hope this has been of some use to you, good luck.
- 4 years ago
discuss this in full with your mortgage lender and real estate agent.