Conventional vs. FHA
 

Conventional Or FHA: What's The Difference?

CONVENTIONAL FINANCING

Conventional financing covers several different loan programs with specialized terms to fit every need. A conventional loan is a mortgage loan that is not insured or guaranteed by any agency of the state or federal government. Conventional programs offer affordable financing combined with private mortgage insurance to provide for a lower down payment and easier qualify guidelines. Traditionally, conventional loans are originated to conform to Fannie Mae or Freddie Mac standards.

  • Low down payment required
  • Fixed or adjustable rates available
  • Variety of terms available
  • Can be used for a purchase or refinance
  • Can be used for either owner or non-owner occupied
  • Higher maximum loan amounts

Over the years, conventional financing has evolved to provide new and innovative approaches to making housing affordable for Americans nationwide. As such, many conventional loan programs offer specialized financing options for the low- to moderate-income homebuyer by offering low down payment requirements and flexible qualifying guidelines.

FHA FINANCING

In 1937, under an act of Congress, the Federal Housing Administration (FHA) was established to provide American families with a unique opportunity to become homeowners. The Federal Housing Administration is a federal agency within the U.S. Department of Housing and Urban Development (HUD).

In general, FHA loans are designed for low- and middle-income borrowers and many first-time buyers. The FHA insures (not funds) home mortgage loans made by Draper and Kramer Mortgage Corp. for both single family (1-4 unit homes) and multi-family (5 or more units) mortgage programs.

FHA financing features:

  • FHA Financing allows for higher income & debt ratios for more qualifying power
  • Fixed or adjustable rates available
  • Low down payment requirements - as little as 3%
  • Permits gifts up to 100% of the down payment including all closing costs
  • Has NO income limits
  • Non Occupant Co-Borrowers are allowed to help occupant borrowers to qualify
  • No cash reserve requirements
  • Variety of terms available
  • Applies to new purchase and refinance loans

To learn more about FHA and/or Conventional financing, contact an experienced DKMC Mortgage Planner today.
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