| Unless you have a giant stack of money just lying | | | | With FHA there is more flexibility with regard to credit |
| around then you're probably going to need some type | | | | compared to conventional loans. For example, a |
| of mortgage financing to purchase your first home. If | | | | borrower with no traditional credit history at all, or even |
| you're like many buyers across the country then you | | | | a troubled credit history, may qualify for a loan under |
| probably have many questions. Should you try to get | | | | FHA guidelines. When a borrower has gone through a |
| an FHA-insured loan or should you go conventional? | | | | period of bad credit FHA underwriter will try to |
| What about mortgage insurance? Is there any way to | | | | determined the cause. When a borrower undergoes a |
| avoid paying it if you put down a larger down | | | | time of financial struggle that is the direct result of |
| payment? Is there a difference a major difference | | | | circumstances that the borrower has no control over |
| between the prevailing interest rates under FHA's | | | | of then the borrower may be eligible for an |
| programs compared to those of conventional loan | | | | underwriting exception so long as the circumstances |
| programs? There are examples of questions that | | | | that led to the difficulty are a thing of the past. The |
| many borrowers face. Here are some of the ways | | | | death of a spouse or even a serious medical problem |
| that FHA and conventional loan programs differ. | | | | are just two examples of circumstances that would |
| FHA requires that a borrower come up with 3.5 | | | | be considered beyond a person's control. Plus, no |
| percent of the purchase price as a down payment. | | | | minimum credit score is required in order to be eligible |
| Conventional loans require a minimum of 5 percent. | | | | for an FHA-insured loan. Nevertheless, you'll find that |
| Regardless of the loan-to-value on a 30-year | | | | many FHA lenders have a minimum credit score |
| FHA-insured mortgage loan a borrower must pay for | | | | requirement which has been voluntarily imposed. |
| mortgage insurance both annually and upfront. | | | | Conventional loan guidelines are much stricter with |
| Depending on the loan-to-value ratio, a borrower will | | | | respect to credit. |
| have to pay a certain percentage of mortgage | | | | While the collapse of the sub-prime mortgage market |
| insurance with a conventional loan. Borrowers don't | | | | and all the upheaval that followed brought all mortgage |
| have to pay mortgage insurance when the | | | | borrowers under greater scrutiny it is nevertheless still |
| loan-to-value is at or below 80 percent. As interest | | | | possible to get a home loan. For most, credit damage |
| rates tend to be comparable for FHA and | | | | is the result of being unable, rather than unwilling, to pay |
| Conventional loans it is generally the amount of | | | | one's bills. By faithfully maintaining and growing a |
| mortgage insurance that will determine which loan | | | | savings account you will be less likely to find yourself in |
| costs more over the life of the loan, all other things | | | | a position where you are unable to pay your bills. |
| being equal. | | | | |