Are the closing costs higher for a FHA loan than they would be for a conventional loan?
I received a GFE sheet and the closing costs were approx. 9% of the cost of the home.
(I was anticipating 3-4%)
- Anonymous1 decade agoFavorite Answer
You need to take the FHA upfront mortgage insurance premium out of the equation to get a better idea of what your closing costs are. The premium is the same no matter what lender you decide to work with so by taking that number out you will get a better idea of what the lender is actually charging you.Source(s): I'm a mortgage banker/broker
- 1 decade ago
Short answer, yes. If you are referring to true closing costs, and not the down payment portion or prepaids, like insurance and per diem interest, etc., and assuming the origination fee stays constant (usually 1%), then closing costs for conventional should be cheaper. However (that is a big however), FHA loans should have a lower interest rate, and they allow up to 6% of closing costs rolled into the loan vs. only 3% for conventional, and FHA down payment requirement is only 3.5% of the purchase price vs. 5% or more for conventional. Also, the FICO score requirement for FHA is only 620, whereas you need at least a 720 for conventional. One last comment, with FHA you will have to pay upfront PMI of 1.5-1.75%....but that, too, can be rolled into the loan if there is room.
Remember, closing costs, and what you need to "bring to the table" are going to be different numbers, technically speaking. What you will have to bring to the table is the total of closing costs, prepaids,like insurance, and down payment portion. FHA will let you roll up to 6% of the costs into the loan if there is room, but you must come with at least the 3.5% down payment as a minimum.)
By the way, your loan officer should have explained everything, and should also be willing to show you a comparison between FHA and Conventional.
Hope that helps.
firstname.lastname@example.orgSource(s): www.citystarfinancial.net www.upgrademycredit.com
- Anonymous1 decade ago
Typically they are a little less (if not the same). FHA wants closing costs to be standard fees, and nothing out of the ordinary. They aren't as regulated as VA closing costs are, but I would expect them to possibly be less than non-government loans.Source(s): What fees did they charge you? You don't have to tell us the amount if you don't want to, but let me know what they called all the fees and I will let you know.
- Anonymous1 decade ago
Closing costs can vary from transaction to transaction and state to state. Generally they are 1-3% of the sales price.
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- lucreciaLv 44 years ago
No idea what to say