FHA LOANS

How an FHA Loan Is Different From a Conventional Loan

While FHA loans and conventional loans are both mortgages that allow you to borrow money to purchase a home, there are a few key differences:

Down payment requirements: While you can get some conventional loans with as little as 3% down, most require 5% down, and borrowers often put down more than that. With an FHA loan, you can get a mortgage by putting down only 3.5%.
Insurance requirements: A conventional mortgage only requires you to pay mortgage insurance if you put down less than 20%. And if you do put down less, the mortgage can be cancelled once you have 20% equity in the house. An FHA loan, on the other hand, requires you to pay mortgage insurance for the life of the loan (unless you put down 10%, and then you can stop paying it after 11 years).
Borrowing criteria: Conventional loans have more stringent credit score requirements; FHA loans allow for borrowers to have lower credit scores.
Interest rates: An FHA APR is usually 1.5 to 2 points higher than conventional fixed-rate mortgages for borrowers with good to excellent credit. But FHA interest rates are lower than introductory rates on conventional subprime mortgages, especially adjustable-rate mortgages that have a big rate increase after several years.
Closing costs: With a conventional loan, you have to pay for all closing costs in full at closing. An FHA loan lets you finance some closing costs and spread them out over time as part of your mortgage payment.

Conventional Mortgages

Conventional mortgages are home loans not insured by the government, typically requiring a higher credit score and a larger down payment, but offering competitive interest rates and flexible terms for qualified borrowers.

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FHA Mortgages

FHA mortgages are government-backed loans insured by the Federal Housing Administration, designed to help low-to-moderate income borrowers with lower credit scores and smaller down payments secure home financing.

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VA Mortgage

VA mortgages are home loans guaranteed by the U.S. Department of Veterans Affairs, offering eligible veterans and active-duty service members benefits such as no down payment, no private mortgage insurance, and competitive interest rates.

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USDA Mortgage

USDA mortgages are zero-down-payment loans for eligible rural and suburban homebuyers, backed by the U.S. Department of Agriculture, with competitive interest rates and flexible credit requirements.

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Non-QM Mortgage

Non-QM (Non-Qualified Mortgage) loans, including the Debt-Service Ratio (DSR) program and Bank Statement program, provide flexible financing options for self-employed borrowers and those with non-traditional income, focusing on cash flow and alternative documentation rather than traditional income verification.

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Jumbo Mortgage

Jumbo mortgages are loans exceeding the conforming loan limits set by the Federal Housing Finance Agency, designed for financing luxury properties and high-value homes, typically requiring higher credit scores, larger down payments, and offering competitive rates for financially secure borrowers.

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