FHA loans vs. Conventional loans
FHA loans have many benefits when compared to conventional loans. There are many benefits for the borrower and also for the lender as FHA loans are less riskier for the lenders as the loans are insured by FHA.
- Down Payment: For FHA loans only 3% down payment is required, while for a conventional loan minimum of 5% down payment is required and it can go up to 15%.
- Credit Scores: For conventional loans you require perfect credit scores while credit score is not an issue if you are applying for a FHA loan.
- Monthly Mortgage payments: It is less in FHA loans as compared to conventional loans.
- Property standards: FHA has certain property standards while conventional loans don't have any property standards. FHA Homes should be inspected properly and should be perfect for living.
Also, you can apply for a FHA mortgage loan after two years in case of a foreclosure and after three years in case of a bankruptcy.
The major differences between an FHA loan and a conventional loan have been explained in a nice way in the article. Just by going through points, you can have a quick idea on FHA loan and conventional loan. The advantages associated with an FHA loan over the conventional loan have been provided here. To obtain both these two types of loans, you have to make some down payment. Down payment required to get approved for an FHA loan is 3% of the appraised value of the home. Again, for a conventional loan, the down payment amount required is around 5 to 15% of the appraised value of the house.
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