Skip to main content
_FB_2018-Icons-finalized-cleaned-up_new_FB_2018-Icons-finalized-cleaned-up_newGroup 9
Back
Scroll to top

FHA Loans vs. Conventional Loans: How to Tell the Difference


Overwhelmed with the prospect of buying a home? FHA loans and conventional loans are likely two sources of financing that you’ve considered. Let First Bank help you understand these options and come to a conclusion about which best suits your needs and budget. After all, choosing the right loan is key for timely, affordable payments.

Choose the Right Loan with First Bank

If you’re a first-time homebuyer or interested in purchasing your second home, there are different qualifications for each loan you should consider:

FHA loans—The FHA, or Federal Housing Administration, provides mortgage insurance on loans made by approved lenders. Single and multi-family homes in the United States (and U.S. territories) can qualify. First Bank can help put you on the right track to securing one of these loans. The advantages of an FHA loan can be:

  • Owing a lesser down payment, as low as 3.5%.
  • Enjoying quicker eligibility following a major credit issue such as bankruptcy or foreclosure.
  • Allowing a co-applicant to help you get the loan, even if you don’t live in the same household.

Conventional Loans—A non-government insured loan that can be used with a second home purchase or an investment. Unlike FHA loans, conventional loans can require a higher credit score (often a minimum of 640), but they can have some major advantages for you. Conventional loans can allow:

  • A risk-based premium, unlike FHA where one set premium rate is required from everybody, MI if applicable.
  • Your monthly payments to be lower, even if you have a higher interest rate.
  • Your loan to cover a higher loan amount.
  • You to cover different types of loans like, investment or second home (FHA doesn’t do those types).

When considering an FHA loan versus a conventional loan, keep in mind that conventional loans are not affiliated or insured with the government like FHA loans. Additionally, an FHA requires mortgage insurance and conventional loans do not, unless the LTV exceeds 80%. There is an upfront MI premium (1.75%) that is required on FHA loans that is not required on Conventional loans.

For a more detailed look at FHA loans versus conventional loans, or assistance with applying, call or visit your local branch to speak with one of our experienced loan professionals.


*Loans subject to credit approval.

———-
Sources:
http://www.fha.com/fha_loan_requirements
http://www.zillow.com/mortgage-rates/finding-the-right-loan/fha_vs_conventional/
https://localfirstbank.com/mortgage/loans-programs/government-loans/
http://www.bankrate.com/finance/financial-literacy/conventional-va-fha-mortgage-1.aspx
http://locations.localfirstbank.com/locations

Trending Topics

Small Business Loans – Albemarle, NC

If you are thinking about opening a small business in Albemarle, North Carolina, First Bank can provide you with a small business loan to get you started. Albemarle offers lower…

Best Small Business Bank – Florence, SC

Florence, South Carolina boasts one of the best business climates in the southeast. The city of Florence is bustling with shops, restaurants, festivals, farmers markets, and much more. If you’re…

Best Savings Account For Kids

Finding the best savings account for kids doesn’t have to be complicated. Savings accounts can foster good saving and spending habits, and your child will probably enjoy watching his or…

Best Business Checking Account – Lillington, NC

If you are a business owner, you know how important proper finance management is to running a successful business. Separating your business bank account from your personal bank account can…

Small Business Loans Made Easy – First Bank of North Carolina

North Carolina is a smart choice for any entrepreneur looking to start a business. The state encourages its residents and visitors to shop local. Organizations like Shop Local Raleigh and…

Installment Loans in South Carolina

  If you're looking for personal loan options in South Carolina, visit your local First Bank today. We offer customized loans built to meet your specific, financial needs. From credit cards…

Best Personal Loans in Albemarle, NC

Are you in the market for an engagement ring and looking for a place to get the best personal loan? If so, you may need to take out a personal loan…

Construction Loans NC

The thought of building a new home can be daunting. All that planning. All that work. And all that money. At First Bank, we can’t design a floor plan or…

Small Personal Loans – Jacksonville, NC

Finding small personal loans in Jacksonville, NC, can be beneficial when you need a little extra money. Whether it's for a planned or unexpected expense, a personal loan can help you…

Small Business Loans in Wilmington, NC

Starting a business from the ground up can be difficult, but rewarding. Whether you are looking to build a new building for your business or move into an existing space,…