3 Differences FHA vs Conventional Mortgages

If you are in the market to buy a home you might have come across these two types of mortgages that are available., FHA or Conventional. Today I am going to talk about the differences

I am going to go over the deposits required, your credit score and I will leave to last the most important and shocking difference.

The DEPOSITS

The deposits can also differ, with a conventional loan the required deposit can be between 3.5 to 10%.

With a FHA loan that amount is between 3 and 3.5 %.

Big difference.

The CREDIT SCORE generally speaking the lowest credit score accepted for a FHA loan is 580. HOWEVER, if your deposit is larger than required then “might” accept a lower credit score.

The minimum credit score for a conventional loan is between 620- 640.

BUT here is the REALLY HUGE difference.

The INSURANCES

If you put down, as a deposit, less than 20% on a conventional loan you will be required to have insurance protection insurance. This insurance protects the bank in case you default. Once you have equity over 20%, say you bought a house at $100,000 and put down $10,000. Once you have paid off another $10,000 or you own 20% of the property you can request the insurance to be removed. Of course this is a savings, more money in your pocket.

BUT with a FHA loan there is a BIG difference.

First you must pay a fee upfront to obtain an FHA loan AND the insurance on the loan is for the LIFE of the loan and in most cases 35 years.

So let me give you an example

Lets say your FHA has a mortgage premium of even $100 per month. That is $1200 a year OR
$42,000 for the life time of the mortgage. Crazy.

Sure to start off, if you must get a FHA loan but for goodness sake, refinance when you can.

My name is Carolyn Chebaro and I have been a Realtor for over twenty years. I have worked with both Buyers, Sellers, Landlords and Tenants. The goal of my videos is to answer all your real estate questions.

Disclaimer- I am not a Lawyer. If you need legal advice I suggest you speak directly with a Real Estate Attorney.

All information provided is taken from the Multiple Listing Service, Miami Board of Realtors, National Association of Realtors and Florida Board of Realtors. All information provided in my videos will be referenced to source.

If you are thinking of selling or wish to buy a home my contact information is:

Carolyn.Chebaro@gmail.com
954.993.4456

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La Rosa Realty
2455 Hollywood Blvd
Hollywood, FL 33020

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