Why Not FHA?

FHA loans are definitely in favor for first time homebuyers and others with limited funds for a down payment.

FHA loans are insured by the U.S Government against default by the borrower.

Conventional loans are loans that are saleable to Fannie Mae and Freddie Mac, the two government-owned agencies. These loans are insured by Private Mortgage Insurers (PMI) when the down payment is less than 20%.

Interest rates for both types of loans are about the same.

A comparison of the major factors of Conventional vs. FHA Loans:


The FHA Advantage:  Best if borrower has a low down payment of less than 10% and as little as 3.5% and/or buyer has low credit scores (usually <660).

The Conventional Advantage:  Mortgage Insurance is less expensive if down payment <20% and not required at all if >20%.  Investment properties allowed.