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FHA vs Conventional Loan Simplified

Posted By: Robert Judy In: FHA vs Conventional Loan
Date: Thu, Jan 26th 2017 1:23 pm

FHA vs Conventional Loan Simplified

When thinking about purchasing a home, whether as a first time buyer or as an experienced homebuyer, one of the most important aspects to figure out is financing. Financing is the non-luxurious side of home buying, everyone loves driving around and looking at different houses dreaming about how it would look if you were to move there, but talking to the mortgage lender and figuring out loans can be taxing. Let’s go over the two biggest type of loans: Conventional and FHA.

Conventional:

-Higher credit scores

-DTI requirement can be up to 45% with less than 20% down

-Minimum down payment 5%*

-Interest rates are higher

-Refinancing will require a credit check

-Max loan amount up to $417,000

-Does not have to be owner occupied

-No down payment assistance programs available

-No mortgage insurance required if 20% or more down or once loan is paid down to 78% LTV

-Not assumable

*PNL allows up to 5% for down payment and closing costs to be a gift

FHA

-Lower credit scored (as low as 580)

-DTI requirement can be up to 55%

-Lower down payment requirements (as low as 3.5%)

-Interest rates are lower

-Streamline refinancing (no home reappraisal, credit check or income verification)

-Max or min loan amounts determined by the county

-Must be owner occupied

-Down payment assistance programs available (SETH, TDHCA, TSAHC)

-Upfront mortgage insurance payment and monthly for the life of the loan

-Assumable

In conclusion, if you’re looking at purchasing a home and have any questions about financing please feel free to reach out to me through text, email, or a phone call. I’m a Charleston native and would love to make your dream home become a reality!

Written by: Robert Judy

RobertJudyRealty.com

Robert.Judy@AgentOwnedRealty

(843)-330-2689