Can you please tell me the difference?

[My2cents]

What is the difference from a FHA loan and a conventional loan?

In this case 2cents is not enough  Oh well My2cents

[Anonymous]

FHA is a government insured loan. If you default on an FHA loan, the taxpayers pick up the bill and pay the bank that services the loan. FHA loans are more desirable to the banks because there is lower risk.

If you default on a conventional loan, The bank takes the hit. This is why banks usually only go to a maximum of 80% LTV. They figure if you default, They will be able to sell the collateral much quicker at 80% of market value.

Good luck.

-D.Morris 

[BrianB_The_Loan_Professor]

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@My2cents wrote:

What is the difference from a FHA loan and a conventional loan?

In this case 2cents is not enough  Oh well My2cents

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From a consumers stand point

FHA is easier to qualify for

Credit scores do not impact rateunless they dip below 620 - or 580 depending on the lender

3% down payment lower monthly mortgage insurance - they do charge up fron 1.75% for insurance but the payment is still usually less.

Conventional is better with 10% down - Needs a higher score to avoid rate hits - Mortgage insurance is a little higher

For most first time home buyers with little down FHA is the clear choice

For someone with decent credit and 10% plus down conventional makes more sense

Brian

[My2cents]

Thanks.   Additional question.  Can you buy a 310k home with an FHA if the cap on a FHA is 280k in your area even if you have the 30k extra down plus the 3% to get the amount financed within your cap for your area?

Thanks in advance. My2cents

[BrianB_The_Loan_Professor]

Yes you can borrow up to the max if you can cover the difference you are fine

The difference would include your down payment so you wouldnt need to still come up with an additional 3%

Brian