Financing: FHA vs. Conventional Loans

If you’re thinking about financing options (other than cash purchases) here are a few key things to remember.  Two major sources of financing are mortgages through the FHA (Federal Housing Administration) or through the bank (conventional financing). Although this list isn’t exhaustive, here are a few things that you should know about each.

FHA Loans
Mortgages that are insured by the federal government (Federal Housing Administration)
Require only 3.5% down payment
Can finance homes up to $250,000
Restrictions on condo’s (See previous blog posts)

Conventional Loan
Loan through the bank (not insured by the government)
Require 20% down payment
No restrictions on condo’s or purchase price

Both loans are not only contingent upon your credit approval, but also the property also must appraise at a certain amount (in most cases, at least the purchase price) in order for the loan to be funded.

For more financing information, feel free to contact me. You may also visit the following link:

FHA info.: http://portal.hud.gov/hudportal/HUD?src=/federal_housing_administration