What are the differences between an FHA loan and a conforming mortgage?
Posted on Tuesday, May 8, 2012 at 7:56:17 PM
Once you’ve determined that it is time to buy a home, the fun part begins – deciphering the home loan lingo to choose a residential financing option.
Are FHA loans for you?
If you don’t have more than 5 percent saved for a down payment or readily available equity from a home sale, FHA loans are probably your best bet. This loan option was designed for low to moderate income earners that have a decent credit history, but little savings, according to Zillow.
For most FHA purchase mortgages and Streamline Refinances, the required upfront mortgage insurance payment is traditionally 1.75 percent of the borrowed amount, claims The Mortgage Reports.
Are conforming mortgages for you?
In contrast to FHA loans, conforming loans are ideal for those with a hefty down payment saved up. If you have 20 percent or more, applying for a conforming mortgage is generally the ideal answer.
If you have between 5 to 19.99 percent saved, asked your loan officer for a recommendation to determine what is the best solution for you.