What is the difference between Conventional and FHA Home Loans?

How are Conventional and FHA Home Loans different? In short, a Conventional Home Loan is not insured by the government but how does that affect you the borrower? 

When you apply for a home loan, you can apply for a government-backed loan (such as an FHA, VA or Rural loan) or a conventional loan, which is not insured or guaranteed by the federal government.

government-backed loan is a loan subsidized by the government, which protects lenders against defaults on payments, thus making it a lot easier for lenders to offer potential borrowers lower interest rates. Its primary aim is to make home ownership affordable to lower income households and first-time buyers.

An experienced Mortgage Loan Officer can help you make that decision after running your credit and viewing your financial documents.

Conventional VS. FHA Rules: 

Conventional: FHA:
Borrower has higher credit score Borrower has lower credit score
Minimum down payment 5% Minimum down payment is 3.5%
Loan has higher interest rates Loan has lower interest rates
Max Loan Amount $424,100. Max Loan Amount decided by County
DOES NOT have to be Owner Occupied HAS to be Owner Occupied
NO Down Payment Assistance Down Payment Assistance Programs
NO Mortgage Insurance if 20% down OR once loan is paid down to 78% loan to value (LTV) Upfront and monthly Mortgage Insurance payment for life of the loan
NOT Assumable Assumable
Portion of Down Payment can be a gift 100% of Down Payment can be a gift
Buying a Home

Conventional VS. FHA Home Loans

Fill out the form or call us directly at 662.890.3000 to see which loan is right for you. 

How much can you borrow from a lender?
Use this calculator to calculate the amount
you can afford from the lender's point of view.

Mortgage Affordability Calculator
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