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  • Writer's pictureKCStark

Buyer’s Guide: Conventional loans and Federal Housing Administration (FHA)

Conventional loans and Federal Housing Administration (FHA) loans are both popular mortgage options for homebuyers in the United States. While they may seem similar on the surface, there are actually a number of key differences between the two that potential borrowers should be aware of before making a decision.


Buyer’s Guide: Conventional loans and Federal Housing Administration (FHA)

One of the main differences between conventional loans and FHA loans is the credit score requirement.


In general, conventional loans have stricter credit score requirements than FHA loans.


  • To qualify for a conventional loan, borrowers typically need a credit score of at least 620.

  • FHA loans are often available to borrowers with credit scores as low as 500.

  • FHA loans are a great option for borrowers who have a lower credit score or who may have difficulty qualifying for a conventional loan.


Another difference between the two types of loans is the down payment requirement.


Conventional loans generally require a larger down payment than FHA loans.


  • For a conventional loan, borrowers typically need to put down at least 3-5% of the purchase price of the home.

  • FHA loans only require a minimum down payment of 3.5%.

  • FHA loans a more affordable option for borrowers who have limited savings or who may have difficulty coming up with a large down payment.


In terms of mortgage insurance, conventional loans and FHA loans also differ.


  • Conventional loans require private mortgage insurance (PMI) if the borrower puts down less than 20% of the purchase price of the home.

  • FHA loans require mortgage insurance premium (MIP), which is a type of insurance that is paid for by the borrower and is required for the life of the loan.

  • MIP is typically more expensive than PMI, so this can be an important factor to consider when deciding between the two types of loans.


One other key difference between conventional loans and FHA loans is the type of property that can be financed.


  • Conventional loans can be used to finance a wide range of properties, including single-family homes, multi-family homes, and even investment properties.

  • FHA loans are specifically designed to finance the purchase of owner-occupied primary residences.

  • This means that FHA loans are not typically an option for borrowers who are looking to buy an investment property or a second home.


Conventional loans and FHA loans are both popular mortgage options in the United States.


While they have some similarities, there are also a number of key differences between the two, including credit score requirements, down payment requirements, mortgage insurance, and the type of property that can be financed. Potential borrowers should consider these factors when deciding which type of loan is right for them.


Still have questions about conventional or FHA loans? Let's talk or you can download my buyer's guide today on Amazon.


Introducing the "Conventional Home Loan Buyer’s Guide - Know What Lenders Know", the ultimate guide to understanding the ins and outs of conventional home loans. In this comprehensive book, you will delve into the world of conventional loans and explore the advantages they offer.


Through this book, you will gain valuable insights into the eligibility requirements and step-by-step process for obtaining a conventional loan. Learn how to compare lenders and find the best deals in the market.


In addition to these crucial aspects, you will also get a thorough understanding of FICO scores, interest rates, closing costs, and other crucial factors that lenders consider when assessing loan applications.


By the end of my book, you will be equipped with the knowledge necessary to make informed decisions and navigate the conventional loan landscape with ease.


Get the "Conventional Home Loan Buyer's Guide - Know What Lenders Know"


Welcome to book the "Conventional Home Loan Buyer's Guide - Know What Lenders Know." Whether you are a first-time homebuyer or a seasoned pro, this easy-to-read guide is designed to provide you with all the information you need to make informed decisions about buying a home using conventional home loans.


KC Stark, a licensed mortgage broker, has compiled a wealth of valuable insights and tips to help you navigate the conventional home loan process with ease. In this book, you will learn about the eligibility requirements, advantages, and step-by-step processes and checklists for obtaining a conventional loan.

As you embark on your home-buying journey, this guide will provide you with the knowledge and confidence you need to make informed decisions that align with your goals.


So, get ready to start your journey to homeownership with know-how by picking up your copy of "Conventional Home Loan Buyer's Guide - Know What Lenders Know."


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