FHA Loan Comparison

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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

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