Conventional vs. FHA Loans
First Time Home Buyers Tips And Advice Florida - Conventional VS FHA Loans
What’s the difference between FHA vs. conventional when buying a home? With a conventional loan, you may be able to buy more bang for your buck with less down. A person seeking a conventional loan with good credit can buy a higher-priced house with less money down. A conventional loan can go up to $450K. And with good credit, you qualify for less of a down payment (3 percent). Also with a conventional loan, you pay mortgage insurance (PMI), which is to protect the lender if you default on the loan. PMI will go away when you hit the 20% invested mark.
The interest rate for a conventional loan with a good credit score is really low right now – in the 2%. This advice is good for firt-time home buyer for an FHA loan (government loan) the max purchase price is $350K. They are more lenient with the down payment and again it has PMI. The difference here is the PMI never goes away. Because of this, you’ll likely want to refinance or sell at some point before the loan is paid off. This loan is better for those without a lot of money in the bank. In summary, the main difference between FHA vs. conventional when buying a home is the purchase price, down payment, and PMI. Ready to start your home search? Call today.