Similarities between Conventional & FHA loans

•   Both currently offer some of the lowest rates in history.  

•   15-year conventional fixed-rate mortgage rates are at an all-time record low.  

•   The most popular FHA & conventional loans are fixed-rate mortgages, both also offer ARMs

Advantages of an FHA Loan

•   Credit scores as low as 580 to qualify.

•   Allowable debt-to-income ratio is higher for an FHA loan.

•   Low down payment – FHA loans generally require as little as 3.5% down.

•   100% gift from a family member for down payment and closing costs allowed.

•   Seller concession of up to 6% of loan amount allowed.

•   FHA loans feature less funds needed to close - leaving more money in your clients pocket at closing.

•   Easy Refinancing – Refinance up to 97.75% of your home’s value.

•   FHA also offers an FHA Streamline which allows you refinance with no appraisal and minimal credit requirements.

Advantages of a Conventional Loan

•   Slightly lower interest rates than FHA

•   Loan amounts of over $625,000 for single family dwelling allowed.

•   Options available on Mortgage Insurance (MI) payments, including piggy-back financing.

•   5% down on Fannie Mae eligible condos allowed.  

•   Borrowers with excellent credit can get lower rates with conventional loans.

•   No Mortgage Insurance (MI) at closing – FHA loans come with mortgage insurance premiums (MIP) that are built in over the life of the loan.  

•   FHA requires a one-time upfront mortgage insurance premium due – currently 1.75% of the total loan amount.  

•   Different repayment terms offer different, more competitive mortgage rates. The shorter your term, the lower the rate.

•   10, 15, 20, 25 or 30-year terms.  FHA loans generally do not offer as many options.

Overview:

If your client has some credit issues and does not have the funds for the standard 5-20% down payment, an FHA loan may be the better option.  If your client has good credit, a stable job and a sizable down payment – they could save more money over the life of the loan by choosing a conventional product.  At Movement Mortgage we excel at helping your client get the loan program that is right for them. Encourage your clients act quickly as these low mortgage rates will not last forever.