FHA Loans vs Conventional Loans: Which Is For You?
Mortgage LaGrange GA – Jeff Wilmoth
You know that you need a loan, but what kind of loan do you need?
FHA Loans are popular in the mortgage world for first-time home buyers due to the fact that the credit standards are much easier to meet to get financed. These types of loans usually come with a low down payment amount, credit score that are less strict, and the option to use a relative non-occupant co-signer that can help you qualify.
FHA Loans are also eligible for streamline refinances, which is essentially a more affordable way to refinance your loan.
While there are several benefits to using an FHA Loan, conventional loans also have their advantages.
For example, if you put a down payment of 20% or less on your purchase, you are not required to pay mortgage insurance to secure the loan! Unlike FHA Loans, conventional loans can be used to buy investment properties and are also used for jumbo loans.
Still slightly confused with the differences between the two? I’ve outlined some advantages of each type of loan:
FHA Loan Benefits
- Low down payment (3.5%)
- Credit score can be as low as 580, much lower than the 620 that is required for conventional
- Have a lower base rate than a similar conventional loan
- Do not have a limit of 43% debt-to-income ratio
- Eligible for streamline refinances
Conventional Loan Benefits
- Low down payment (3%)
- Cover significantly higher loan amounts than FHA
- Monthly payments can be lower despite higher interest rates
- Mortgage insurance is needed for loans that are more than 80% loan-to-value, whereas insurance is needed on all FHA loans regardless of loan-to-value amount
- Mortgage insurance is solely monthly or single premium
If you’re in need of a mortgage loan but not sure which is right for you, speaking with a mortgage professional like myself can give you the advantage you need. To learn about FHA eligibility, check out this page. For information on conventional loan eligibility, go here.
The loan process can be complex. Whether it’s buying a brand-new home, refinancing a current loan or renewing, getting a mortgage LaGrange GA with a lender such as myself is a great option.
For more information, contact me today!