If you’re in the market for a mortgage, you may be wondering which loan is better: FHA or Conventional?
The answer is dependent on many factors, but we’ll walk you through some key differences:
With an FHA, you may be able to get a better rate than you could with a conventional loan, depending on your credit score.
Not only is this part of your monthly payment going to be higher, but FHA will charge a funding fee of 1.75% up front as well, which will be rolled into your loan.
Both loans require a mortgage insurance (PMI) but with a conventional loan, that insurance premium will eventually drop off, or, if your down payment is 20% or more, then you won’t be required to have PMI at all. With an FHA, your PMI is there for the long haul, and that can make a big difference in your monthly payment.
FHA requires a standard 3.5% down payment, while Conventional requires 5% down, depending on your credit score.
Depending on your credit score, down payment, and monthly payment needs, you may be surprised which loan option is better for you.
“Definitely talk to a lender, and have them run different scenarios to see which option works best for you,” said Grant Deyoe, a Capital Homes Preferred Lender with RCB Bank.
We are always happy to help you get an idea of what you need in a home, and what you want to pay, and helping you find a trusted lender that will help get you the best loan possible.