FHA vs Conventional

FHA or Conventional Loan

If you are first time home buyer or looking to refinance, you are probably asking yourself these kinds of questions. Different situations require different types of loans.

FHA Is the Way

FHA guidelines state you only need a 580 credit score to qualify for an FHA loan, where a conventional loan will require at least 620. However, this number may vary from lender to lender.

Conventional loans

Are available through or guaranteed by a private lender (banks, credit unions, mortgage companies) or the two government-sponsored enterprises, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

FHA loans

An FHA loan is more flexible to obtain, but no matter what you will have to pay mortgage insurance. A Conventional loan requires a higher credit score and more money down, but does not have as many provisions.

Credit Scores

For a score with a range between 300-850, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered to be excellent. Most credit scores fall between 600 and 750.

Mortgage insurance

Mortgage insurance can help you for the long term. With a down payment of less than 20%, both FHA and conventional loans require borrowers to get mortgage insurance that protects the lender in case of default.

The Provisions

When you get an FHA loan, you have to live in the house as your primary home. Investment properties and homes that are being flipped (sold within 90 days of a prior sale) aren’t eligible for FHA loans.

Loan Types

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