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FHA Loan Comparison
FHA Loan vs. Conventional Loan
Many people believe that because they may have little or no credit, some credit problems, or because they have limited resources for a down payment that they are restricted to FHA financing. That is not true! Until a borrower begins the pre-approval process he/she may not know the programs for which they may qualify. Additionally, while in some cases an FHA loan may have advantages, in other instances- particularly when it comes to loan amounts, FHA financing may prove to be too restrictive. If a borrower is self employed or in another type of situation where proving income may be difficult, FHA is likely to reject the loan application, while it may still be possible to obtain conventional financing- even if the credit is not perfect! To learn about the available options, please click the button below and a loan officer will review your information without obligation and discuss with you available options that fit your needs.| FHA | Conventional | |
|---|---|---|
| Maximum Loan Limits per County | Yes | No |
| Mortgage insurance included in loan | Yes | Not always |
| *Maximum purchase loan | 97% | 107% |
| Rate depends on Credit Score | No | Yes |
| Seasoning requirement for bankruptcy | 2 yrs | None with some programs |
| Seasoning requirement foreclosure | 2 yrs | Depends on program |
| Open Collections | None | Depends on program |
| Drop mortgage insurance with equity | No | Yes |
| Non-verified (stated) income programs | No | Yes |
| Streamline refinance | Yes | No |
| Non-occupant cosigner | Yes | No |
* There is a 102% FHA program- 97% first mortgage and a 5% second mortgage. Qualification for the 5% second mortgage though is based on low income limits set per county.
*FHA rates are not guaranteed lowest rates, and the rates will vary by lender.
Zero Down (conventional) vs. 3% Down. (FHA) $200,000 Purchase Price*
| 100% LTV** | 97% LTV | |
|---|---|---|
| Amount Financed | $200,000 | $194,000 |
| Down Payment | $0 | $6,000 |
| Impounded Taxes (6 mos.) | $0 | $1,250 |
| Impounded Insurance (2 mos.) | $0 | $113 |
| Mortgage Insurance (2 mos.) | $0 | $336 |
| PITI Reserves (2 mos.) | $0 | $3714 |
| Total Needed To Close | $0 | $11,413 |
