Question about what mortgage lenders can approve? Contact our loan agent in San Ramon.
Loan Types: Conventional Vs FHA
If you’re a first time homebuyer, you’re probably confused about the different loan types like FHA loans and conventional loans. We’ll go over the main differences, advantages and disadvantages of the loan types:
FHA Loans are geared towards first time homebuyers, specifically. The reason why is because the qualification requirements aren’t as strict. This includes down payment, income and debt-to-income ratio requirements. The qualifications aren’t as strict because you will be paying private mortgage insurance each month to ensure you don’t default on the loan.
- You can put forth a down payment as low as 3.5%
- Low minimum credit score
- Easy to qualify
- Private mortgage insurance (PMI) for the lifetime of the loan
- Higher mortgage rates for jumbo loans
Conventional loans are typically for those who can afford to make a large down payment, who want flexibility in loan terms, or who want to buy a more expensive home than an FHA loan would allow.
- No private mortgage insurance required with 20% down
- Easy loan term changes
- More stringent qualification requirements
- Higher mortgage rates
Contact our home mortgage broker in San Ramon for home mortgage loan and mortgage refinancing.