Conventional and FHA Mortgages may seem very much alike due to the fact that they are provided by private lenders as well as banks. However, there are a lot of differences between these credit types.
Here are a few of them, the applicants should pay attention to.
FHA mortgages are insured by the Government and offered to all home-buyers through the Federal Housing Administration. Such loans are the best solution for those, who have restricted cash reserves or less-than-perfect credit. By the way, find out what credit score allows you to get an FHA loan. If you fail to cover your credit obligations, the FHA will repay the lender’s loss.
The mortgage loan provider can suggest you beneficial terms under this program such as:
- Low requirements for down payment (as little as 3.5% of the home price)
- Low closing costs.
What Are The Criteria for a Conventional Loan?
A conventional mortgage is issued to the borrowers who meet specific criteria such as a minimum credit rating, steady employment, and definite cash reserves for a down payment. In this type of loans, there is no governmental insurance.
If you have satisfactory credit, healthy income and able to manage the down payment, you will succeed in getting a conventional loan.