What is the difference between an FHA loan and a conventional loan?

An FHA loan is backed by the federal government, which mitigates the risk to lenders, allowing them to offer FHA loans with lower down payments (3.5% compared to the usual 20% with conventional) and less stringent income and credit requirements. However, as the loan is insured, you have to pay that mortgage insurance which will generally make your payments higher. You should contact a local mortgage banker to discuss your specific situation to see what the best option is for you.

FHA (Federal Housing Administration) is a loan that is insured by the federal government against default. If you don't pay, and the lender suffers a loss after the home is foreclosed, the lender can file a claim with the federal government for reimbursement of their loss (less deductible).. Conventional loans are private loans that conform to a set of guidelines and will require private mortgage insurance (PMI) which will pay any losses to the lender if a foreclosure occurs. If you have a good credit score and low debt to income ratios, you are far better off going conventional than FHA, since their mortgage insurance rates are very high... .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

FHA loans are insured by the government, are not credit score driven and will allow for slightly higher LTV's. conventional loans don't have the government insurance, are credit score driven and are restricted to a 95 LTV

FHA loan has much higher mortgage insurance rates and only requires 3.5% down. Generally you can get approved with 580+ scores. On a conventional loan you can finance a loan with as low as 3-5% down with lower MI rates, Most lenders are 620+ to qualify.

An FHA loan only requires a 580 credit score (some lenders will go even lower but usually at a high cost, and any score under 580 requires 10% down payment) to get up to 95.6% financing and up to a 6% sellers concession, the better your score the better the rate will get up to a point. FHA will allow up to a 55% back end debt ratio if you qualify. You will also be required to pay 1.75% up front mortgage insurance premium which is added to your loan amount and financed in. You will also be required to pay a monthly mortgage insurance premium for the life of the loan at a current rate of 1.30% at 90% or lower Loan to value and 1.35% at 90.01 and up no matter what your loan to value is or payed down to.A conventional loan will require a minimum of 620 credit score for up to 97% financing, and just like FHA, the better your score the better your rate up to a point. There is no up front premium but there is monthly mortgage insurance on any loan that is over an 80% loan to value and it is typically cheaper than FHA until you get up to 90 or 95% and then it is close to the same. Max debt ratio is typically 45% back end, in some rare cases you can get approved as high as 50% with major compensating factors.The best way to find out which is the best loan for you is to discuss your situation with a mortgage pro and let them lay out all your options for you.Call us or email us at 201-962-3555 or Team@BestMortgageOption.com for ano cost no obligation analysis of your situation ask for Michelle or Benny. We will find the Best Mortgage Option to suit your needs! Check us out at www.BestMortgageOption.comAsk us about the awesome discounts we offer heroes as a Homes for Heroes affiliate!

FHA (Federal Housing Administration) is a loan that is insured by the federal government against default. If you don't pay, and the lender suffers a loss after the home is foreclosed, the lender can file a claim with the federal government for reimbursement of their loss (less deductible).. Conventional loans are private loans that conform to a set of guidelines and will require private mortgage insurance (PMI) which will pay any losses to the lender if a foreclosure occurs. If you have a good credit score and low debt to income ratios, you are far better off going conventional than FHA, since their mortgage insurance rates are very high... .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

An FHA loan is backed by the federal government, which mitigates the risk to lenders, allowing them to offer FHA loans with lower down payments (3.5% compared to the usual 20% with conventional) and less stringent income and credit requirements.

FHA loan is a loan is backed by the Federal government and requires mortgage insurance. A conventional loan depending on the down payment, may or maynot require mortgage insurance.

Conventional means a loan that is not government insured. Conforming conventional means a loan backed by Fannie Mae or Freddie Mac. An FHA loan has insurance on the loan backed by the government (HUD). If you default on an FHA loan, the government will pay the lender a portion of any loss back to the lender. www.Joemetzler.com/fhaloans.htm

An FHA loan is a government loan program that is backed by the Federal Housing Administration. Since the loan is backed by the Federal government, the lender is protected if a borrower were to default on their loan. This allows lenders to offer a loan under the FHA program to borrowers with credit scores as low as 580 and with down payments of as little as 3.5% of the purchase price. The one drawback with an FHA loan is that you will be required to pay for private mortgage insurance (PMI) for the entire life of the loan. A conventional loan is a private loan that does not offer lenders any protection in the case that a borrowers defaults. In order to protect themselves with a conventional loan, lenders often require a good credit score, low debt-to-income ratio and a down payment of 10-20 percent.