California Mortgage Hero: Conventional Loan VS FHA Loan
When looking for a home loan, you have several options. The two most popular choices for homebuyers are a conventional and FHA loan.
Each has their own benefits dependent on your current credit standing, your money available for down payment, and comfort level when it pertains to monthly payment.
FHA or Federal Housing Association Loans are a popular option for first-time homebuyers. A few highlights include:
3.5% of the purchase price is the minimum down payment required
The minimum credit score varies based on lender, so check with the Chris Reese Mortgage Team to discuss your current situation (we can do FHA down to a 500 credit score)
Interest rates are extremely competitive
Mortgage insurance is required
Down payment can be gifted from a family member
Down payment assistance is available
Conventional loans on the other hand are not guaranteed by the government and typically require a larger down payment.
Conventional loans are offered if you have 5% to 20% of the appraised value of the house you want. However, whether or not you qualify for the loan depends on a several factors.
Down payment requirements dictate that you must have a good credit score (660 and above) to qualify for a low down payment conventional loan. Typically, with 20% down, you can qualify with only a 640 FICO.
The credit score will also determine the interest rate at which you will repay the loan; poor credit scores require higher interest rates. The traditional mortgage loans can only offer 80% of what you need to buy the house, while the high ratio option will offer you up to 95%.
If you are a first-time homebuyer, it is advisable that you contact the Chris Reese Mortgage Team to discuss your options prior to the home search.
We will take the time to discuss the benefits of each loan available and how it might work best for your particular situation.
Call us today!
Contact the Chris Reese Mortgage Team with any mortgage questions. Call 916-773-5350
www.sacramentohomeloanspecialist.com
http://californiamortgagehero.com/2014/02/23/conventionalloan/
California Mortgage Hero: Conventional Loan VS FHA Loan
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