FHA vs Conventional Loan Types: Which is Right for Me?
An FHA loan allows for lower credit scores and can be easier to qualify for than a conventional loan. However, Conventional loans may not require mortgage insurance with a large enough down payment. The benefit of FHA vs conventional down to the individual needs of the borrower.
Let's take a look at both mortgage types to help you decide what's right for you.
FHA vs Conventional Loans Comparison Chart
FHA vs. Conventional Loans: Key Differences
FHA loans require mortgage insurance regardless of down payment amount, compared to conventional loans where you need mortgage insurance for down payments under 20%. FHA mortgage insurance payments will be the same regardless of your credit score.
FHA Loans
· Lower credit scores allowed
· More rigid property standards
· Somewhat higher down payment needed
· Private Mortgage Insurance (PMI) is required for down payments less than 20%
Conventional Loans
· Higher credit score needed (at least 620)
· Slightly smaller down payments allowed
· Private Mortgage Insurance (PMI) is required for down payments less than 20%
· More liberal property standards
If you are a first-time home buyer or looking to refinance, you are probably asking yourself these kinds of questions. Different situations require different types of loans. In this article, we will take a look at FHA and Conventional loans. Using examples, this article will give you a better understanding of these two types of loans, their benefits and their drawbacks.
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