What’s the Difference Between FHA and Conventional?

It’s no surprise that there are a number of options when it comes to Tennessee home loans. Each different loan comes with different qualifying requirements and can be modified further by term and interest rate.

With all of these options, the mortgage process can seem intimidating without the help of a qualified and experienced mortgage professional, like you will find at Platinum Financial Funding.

Our team of mortgage experts is here to help you find the best financing options when you decide to purchase a home. Because there are so many different options, working with a professional in the industry can save you the time and headache of researching every type of loan and save you money by securing you the lowest rate possible.

While every mortgage is different, even within the same category of loans, this post will go over the differences between two of the most common mortgage loan options available today, the FHA home loan and the Conventional mortgage loan. It is our hope that the information provided below will serve as a great foundation for you as you begin to explore your mortgage options.

The following chart details some of the main characteristics associated with these two types of loans:

 

FHA Home Loans Conventional Mortgage Loans
Insured (by Federal Housing Administration) Not Insured by Government Entity
Insurance Premiums Required No Insurance Premium Required (With Down Payment of at Least 20%)
Federal Government and Lender Approval Required Lender Approval Required
Minimum Required Down Payment: 3.5% Minimum Required Down Payment: Typically, 10%
Less Strict Qualification Guidelines Stricter Qualification Guidelines

 

Of course, there is more involved with each of these loans options, all of which can vary based on your current financial institution. There are also some benefits of each that are not included in the table above.

For example, FHA home loans provide borrowers with better refinance and transfer options and Conventional mortgage loans can be used for the purchase of investment properties or properties worth much larger dollar amounts.

If you are making the choice between FHA and Conventional for your mortgage, in addition to consulting with a mortgage professional, your decision may be easier if you consider the following question. Do you want to pay more up front and spend less each month on mortgage insurance, or do you want to spend less up from and more on insurance?

If you prefer the former, a Conventional mortgage loan is probably better for you. If you went with that latter, you are probably looking for an FHA home loan.

Whether you have already narrowed your options down to Conventional or FHA, or you aren’t sure where to even begin, give us a call today so we can discuss your options and save you the most money on your home financing!

 

Source: https://www.homebuyinginstitute.com/mortgagetypes_article6.php

Source: https://www.zillow.com/mortgage-learning/fha-vs-conventional-loans/