FHA Vs Conventional Loan?

Is there any advantage of one over other?

Does federal insurance provide any extra protection if my house goes under?

Is there any protection I can take in conventional loan?

4 Answers

  • 9 years ago
    Favorite Answer

    There is a big difference in the down payment required.

    A. Under a FHA mortgage loan

    #1 Down payment could be as low as 3.5%

    #2 Down payment might be a gift from family, friend or charity group such as a church.

    #3 Underwriting guidelines are not as stringent.

    #4 There is something similar to PMI that is paid the life of the mortgage loan.

    #5 You are required to pay your county taxes and insurance monthly through your mortgage company.

    #6 Under certain circumstances you might include an amount make a few minor repairs found during the FHA appraisal

    B. Under a conventional mortgage loan

    #1 The down payment could be between 5%-10%, currently the norm is approximately 10%

    #2. If you would want to avoid the monthly PMI payment you would be required to have a down payment of 20%

    #3 The underwriting the mortgage loan is more stringent than that of a FHA mortgage loan.

    There are no additional protection for any borrower taking any mortgage loan be it a conventional, FHA or VA mortgage loan. If the property you decide to purchase depreciate in value there is no protection. Perhaps you might check with your insurance company, they might offer some type of protection.

    When applying for a mortgage loan, you should apply through a mortgage broker that is able to do government mortgage loans. Make sure your loan officer go over and explain each mortgage loan you are approved for to include all government mortgage loans.

    Once you have an understanding of the mortgage loans you are qualified for, you are able to make an intelligent decision based on your financial situation at the time.

    "I hope this has been of some benefit to you, good luck.

    "FIGHT ON"

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  • Lisa L
    Lv 6
    9 years ago

    Credit scores & down payment are the big factors that determine which is best. Less than 20% down & you will have mortgage insurance unless you go VA or USDA & on all loans with less than 20% down you will have taxes & insurance in your payment.

    FHA mortgage insurance does come off when your loan to value gets to 78% (using original sale price as the standard) or 60 payments, whichever is later. If you go with a 15 year FHA loan & your LTV is less than 90%, you have no monthly, only 1% upfront.

    Find a mortgage banker to help with your financing. No middle man to pay like with a broker. She will work up scenarios & you can choose which is in your best interest.

    Good luck. I hope you get the home of your dreams.

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  • 3 years ago

    FHA loans at the instant are not score based yet use your final 2 years credit, employment and condominium historic past. you are able to desire to no longer have any lates in any respect in the previous 24 month era. additionally, no bankruptcies in the previous 4 years. FHA courses the valuables could desire to bypass an inspection as nicely. Older residences would possibly no longer bypass (roof could desire to have 5 years existence left etc) Your lender ought to describe ALL of this to you. With the decrease down fee you MIP (very own loan coverage top rate) requirement would be greater that's you place extra funds down 10%. So in theroy, the decrease activity fee could fee slightly you extra month-to-month. Make yourlender practice you area by way of area the two courses. Then evaluate your fee low-priced rates and month-to-month costs - %. the non-public loan that ultimate fits YOU. wish this permits.

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  • 9 years ago

    FHA loans require lower down payments. That's the benefit. Otherwise, nothing is really that different.

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