FHa home loans

FHa home loans?

I live in Michigan. Can anyone tell me the diff. between FHA loans & conv. loans & who would benefit from an FHA loan over a conv. loan?

Other Answers:

fha loans you never can pay off,and a conv.loan is sit up on a certain yearly pay off either 15,20 or 30 years.i would stay away from a fha loan,if you ever re-*** on your loan you can never get your credit back on trac for 20 years.i had lots of trouble with our fha loan and i even sighned it back over to the government,i couldnt never ever get another loan for a home because of them.beware

Well there's a lot of differences. The main ones are:
1. FHA is more forgiving of past credit problems than conventional loans are. It has no minimum credit score requirements.
2. FHA allows you a bit higher debt ratio to qualify. This is the percentage of your income that goes to pay your mortgage and other debts every month.
3. The mortgage insurance that you pay to cover the lender in case you default is figured differently. FHA charges 1.5% upfront and then .5% monthly for everyone, regardless of the details of the loan. Conventional loans vary based on your credit score, the type of loan, the equity you have, and what you're using the money for.
Who benefits?
1. Anyone who has poor credit or more debt than conventional loans allow.
2. Anyone who would have cheaper mortgage insurance using FHA's method of calculating than the conventional (typically borrower's with little equity, or those from number 1 above)

Conventional loans typically require more down payment. If you do not put 20% down on the home, you will have to pay mortgage insurance. Depending on how much you put down the factor will vary.

FHA loan is best for people who can only put 3% down. The mortgage insurance (MIP) monthly is going to be about 1/2 of what you would pay monthly with a conventional loan. Of course, in most cases you will also have an "Up Front Mortgage Insurance Premium" to pay at closing, which is about 1.5-2% of the loan amount. FHA is also a little more lenient on certain credit issues.

If you have a low credit score ...less than 620....and have little money down..you should go with FHA.

Conventionals are good for 620+ credit scores and 5% down.
FHA only requires 2.25% down payment...and you can have a real low score, and still get 7% or less on a 30yr fixed.

1st time home buyers benefit from FHA...and those who are in adjusting ARMs.

Conventional can give you the best rates...but you will need a larger down payment or more equity in the home.