FHA vs Conventional Mortgage
FHA and conventional mortgages are two of the most popular types of home loans available. Both offer their own advantages and disadvantages, so it's important to understand the differences between them before you decide which one is right for you.
FHA Loans
FHA loans are insured by the Federal Housing Administration (FHA). This means that the FHA will cover the lender's losses if you default on your loan. FHA loans have more relaxed credit and down payment requirements than conventional loans, making them a good option for first-time homebuyers and borrowers with less-than-perfect credit.
- Credit score: Minimum 580
- Down payment: 3.5%
- Closing costs: Typically higher
- Interest rate: Typically higher
- Mortgage insurance: Required
Conventional Loans
Conventional loans are not insured by the government. This means that the lender is taking on more risk, so they have stricter credit and down payment requirements than FHA loans. However, conventional loans often have lower interest rates and closing costs than FHA loans.
- Credit score: Minimum 620
- Down payment: 3% to 20%
- Closing costs: Typically lower
- Interest rate: Typically lower
- Mortgage insurance: Not required if you make a down payment of 20% or more
Which is Right for You?
Ultimately, the best type of loan for you will depend on your individual circumstances and financial situation. If you have less-than-perfect credit or are unable to make a large down payment, an FHA loan may be a good option for you. If you have good credit and can afford a larger down payment, a conventional loan may be a better choice.
It's important to talk to Farmview Mortgage to get pre-approved for a loan before you start shopping for a home. This will give you an idea of how much you can afford to borrow and what your monthly payments will be. It will also help you to compare different loan options and choose the one that's right for you.
Dylan has spent the most of his professional life in retail banking and financial services. What began with credit counseling and collections eventually evolved into sales, operations, and management for several of the top retail banks in the United States. Dylan founded Farmview Mortgage, LLC to bring his retail knowledge to the wholesale environment, where he can focus on what he enjoys most: assisting his customers.
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