What are the major differences between FHA and Conventional loans?

FHA allows for lower down payments (3.5%), where Conventional will require 5% to 25%. FHA charges an upfront mortgage insurance premium of 1.75% of the loan amount, Conventional does not. FHA does not have a minimum credit score requirement, (under 580 requires 10% down payment), conventional requires a minimum of 620, but ideally you should be above 660. FHA has very expensive monthly mortgage insurance, currently at 1.35% annually, Conventional MI is tiered based on how much you put down, and if you put more than 20%, you wont pay any MI. FHA MI is for the life of the loan (beginning June 4th). Conventional MI can be dropped after 2 years if your value has increased or you pay your mortgage down to where you have 20% equity or more. FHA allows for higher Debt to Income ratios (up to 57% DTI), where conventional requires lower ratios (Ideally 42% or lower).. There are other differences, but the ones just described are what borrowers compare to decide which way they will go. .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Biggest difference is on FHA you can purchase with 3.5% down, and with conventional you will normally need 5% down payment minimum. The other big difference is that FHA has an upfront Mortgage Insurance (MI) fee, along with a yearly MI - paid monthly; while the conventional has no upfront MI, just the yearly MI, and that may be a bit lower than the FHA rate. For FHA, after June 2, 2013, the Mortgage Insurance will NOT go away, while for conventional it will usually drop off when you have 22% equity (@6-8 years normally).

Plenty, but here is a nutshell:FHA charges an upfront mortgage insurance which is added to the loan amount and they charge a monthly MI for the life of the loan, where as Conventional will only charge a monthly MI if your mortgage is over 80% loan-to-value (of the property), and no upfront MI.The advantages of FHA is that their Debt-To-Income ration can be higher, your credit score can be lower (technically as low as 580 but most banks will want 620+ or 640+) and you can put down as little as 3.5% vs 5% Conventional.Everyone's situation is different and for some people FHA can be beneficial as it can make or brake it regarding buying a house. If you want do discuss your situation you can call me at 718-906-6117 or email me at yrappaport@fmm.com.

FHA loans only require a 3.5% down payment and are very popular with newer home buyers. The upfront mortgage insurance of 1.75% can be financed into the loan. The lowest FHA rates can be had with a credit score at 640 or lower in many cases. Seller's can contribute up to 6% of the purchase price toward loan closing costs. Borrowers with existing FHA loans can refinance into a lower rate with a Streamline refinance and in most cases wont require a new appraisal. A borrower can refinance into an FHA loan and take cash out up to 85% of the home's value to pay off the existing mortgage plus cash for bills, repairs, upgrades, vacation, etc.Conventional loans are geared towards borrowers with higher credit scores (720+) and larger down payments (20% +). Conventional loans can be had with scores down to 620 and with lower down payments but the interest rate and or cost of the loan is going to be significantly higher than the upper FICO score tiers. Conventional loans can secure primary, secondary, and investment properties. Conventional loans can be a great way to lower your mortgage payment and or term and there is no mortgage insurance if you have 20% or more equity in the home.

Rates, Mortgage Insurance Factors, Credit Score requirements, Down payment requirements, Foreclosure and BK Seasoning requirements, LTV value limits, Debt to income Ratio guidelines, Appraisal requirements, Loan options, refinance guidelines, MI Drop elimination guidelines, and more. Anything specifc you are looking for?

Major differences. FHA offers very liberal guidelines compared to Conventional. For instance, FHA allows the highest Debt to Income ratios, generally the lowest down payments, lowest credit scores down to 580, generally lower rates and most other guidelines are lax by comparison as well. However, PMI & MIP is required, regardless. Conventional does allow for Upfront MIP if of course you're above 80% LTV which can save you a ton depending on the situation. Lots of Pro & Cons for each depending your specific scenario & needs.

FHA offers 3.5% down payment; conventional lenders require 10% to 20% down payment.

Biggest difference is on FHA you can purchase with 3.5% down, and with conventional you will normally need 5% down payment minimum. The other big difference is that FHA has an upfront Mortgage Insurance (MI) fee, along with a yearly MI - paid monthly; while the conventional has no upfront MI, just the yearly MI, and that may be a bit lower than the FHA rate. For FHA, after June 2, 2013, the Mortgage Insurance will NOT go away, while for conventional it will usually drop off when you have 22% equity (@6-8 years normally).

FHA loan- allows for lower down payment, higher debt to income ratios, lower credit scores, etc.....Conventional loans- higher down payment, if you have 20% down no mortgage insurance required, lower debt to income ratios, etc...

FHA loan is one of the easier types of mortgage loans to qualify for because it requires a low down payment (3.5 percent) and you can have less-than-perfect credit.A Conventional mortgage loan require a higher down payment or a lower debt to income ratio.

Mortgage insurance and down payment size are the major differences.