Better loan? FHA or Bank?

[kamila7]

Just wandering which would be better as a first time buyer or is there no difference???  Thanks!

[Anonymous]

FHA is a type of loan that only requires 3.5% down and a 620 score to get the best rates.

If you go Conventional then you would want to have at least a 10% Down Payment in order to get the best interest rate.

Which route you chose will be based on how much $$ you have for a down payment and how good your FICO score is.

Good Luck!

[BrianB_The_Loan_Professor]

Agreed

If you give us more info on your scenario we may be able to give better direction?

B

[kamila7]

Thanks so Much!! I guess I was wandering what the differences are which you answered, I currently don't have more than the 3.5% to put down and my fico scores are in the 665 range, so probably go with an FHA loan trying to buy a short sale so I know the process is long... Do the conventional loans have better rates?

[BrianB_The_Loan_Professor]

Rates are about the same but the monthly MI is diff. FHA Pays a chunk up front but the monthly is less. You would need higher scores to qualify for MI with a  conventional loan.

FHA is the way to go

[Anonymous]

The terminology in your title confused me for a moment, so I'm going to make sure you didn't mean literally what you asked. The Federal Housing Authority (FHA) DOES NOT make loans -- it federally insures loans provided by financial institutions, often banks. For example, my FHA loan was originated by a regional bank, with whom I contracted. Then, of course, about 90% of loans are sold by the originating lenders to such consolitators as CountryWide/BankofAmerica. So, anyway, you do understand, right, that you likely are getting a loan from a bank or other financial institution even WITH an FHA loan?

[Anonymous]

I was in your boat and I'm glad I went FHA. I actually got a better rate than some people who are getting convential loans. I got a 4.5% on May 15th, and I only had to pay 1.25% down (I got a downpayment grant to pay the rest). Plus, I got the sellers to pay all of the closing costs. If you do decide to get an FHA, make sure you see if you qualify for something called a mortgage credit certificate. That will put thousands of dollars in your pocket over the years that you live in the house.

[Anonymous]

Definitely look into down payment assistance programs in your area if cash is a problem. Also, you could see if your area (and income) qualifies for USDA Rural loans. They're 102% financing so there's no down payment (and covers at least some closing costs).

http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

[kamila7]

Thank you all for the responses and the clarifications between an FHA and bank loan, I was not aware of this before.  About the downpayment assistance programs where do I look to see if I qualify? Which one did you use?  I live in Illinois right now, if that has any meaning in this conversation...

[Anonymous]

Google your county's name along with down payment assistance and you should see what's available in your area.