I have a FICO of 691 now. Why Would a House Not Be Approved for a FHA Loan?. And the appraisal is required as part of the FHA mortgage loan package. Will I be able to remove my pmi since my original fha loan was from 2003. The same can be said for conventional. ), And you can get financing on more property types, Including vacation homes and investment properties. It may not always seem clear whether to apply for a FHA loan or conventional loan. You may want to consult with a bank/broker to see if you qualify and if it makes sense to refinance into a conventional loan. You could look into the FHA OTC (One Time Close) program and potentially use land in lieu of a down payment. I can’t decide to go with FHA for lower rate 3.5% or conventional loan with higher 4.25% but with no PMI. They might also consider asking for less in seller contributions to help with closing costs. Q. My question is I am a first time buyer with a overall credit score of 723. We already have a loan through a bank, should we start with them since we have a good standing with them? The FHA stands for Federal Housing Administration, a government housing agency that insures mortgages. It’s a question many ask, especially when comparing loan options to conventional, VA, or other non-FHA mortgages. So i would want to know can i get any conventional loan with 7% down payment for purchase price 670k….i was told minimum is 10% down for conventional loan for loan value above 430k. Thanks in advance. The Federal Housing Administration's loans have become a valuable source of financing, especially for people experiencing tough economic times. The terms and conditions do not thrill us. FHA financing is not trusted because real estate agents do not understand how they work. With FHA, you have to pay MI upfront AND monthly for the life of the loan (in most common scenarios). Could be low credit scores or some other issue, or no issue at all. I have the 5% which is about 6600. First, if the property has safety issues or things that need to be fixed, a Conventional appraisal will be less likely to point out those issues while an FHA appraiser will require those to be fixed prior to closing. FHA and Conventional Loans Both Offer a Great Low Down Payment Option, FHA Loans Good for Those with Poor Credit, FHA Loans Hugely Popular with First-Time Buyers. You’ve really got to do the math to figure that out. Hi, just stumbled on your site looking for alternatives for FHA loans. Fannie and Freddie have a two year waiting period if there were extenuating circumstances, otherwise it is four years. My concern with FHA was if we, as sellers, could run into problems. Meanwhile, conventional mortgage loans require a minimum 620 FICO score. Which is best FHA or conventional loan? They can also help you with any snags you might run into. However, I’m trying to see what is the best overall. Contact us for more information about our services today. I am furious and don’t know what to do. "Sellers prefer a buyer with conventional financing over FHA financing because they feel the buyer is in a better financial position." My home has been under an FHA loan which I took out 14 years ago on a 30 year mortgage but my account type on my mortgage company site now says I have a Conventional Without PMI mortgage however, I still pay insurance and taxes through my monthly payment to them. Why do sellers prefer conventional financing? Find real estate on Long Island. And as mentioned, scores between 500 and 579 require a higher minimum down payment of 10%. The only thing is that i dont want to pay the extra insurance for 30 yrs i dont know if its a good plan to go with the FHA loan…. Here's the short answer: While most of the costs relating to an FHA loan can be negotiated, it is usually the buyer who pays for the home appraisal. With an conventional loan, I have the 7% down payment, DTI is 12% and the credit score. can i go from my FHA loan to conventional loan? ... Take a look at how FHA and conventional loans might compare when you consider down payment, interest rate, and monthly payments. My scenario is this: my wife and I are buying new construction and we had a pre approval now midway through the house being built we have been told that we were denied for our conventional loan through the builders mtg company. Home sellers really don't know the difference between the two loans. will this start the process over with the bank since we have to change all of the paperwork over to conventional? Compare and contrast and do the math, there are no shortcuts! Good luck! House payment is 1400 paying only interest nothing to principal and with the FHA loan my payment would drop like $50 .. You might want to try another loan officer/broker/bank to see what alternatives you have. My 1st is $151,000 at 4.625 (Conventional loan) and my 2nd (home Equity loan) is $56,000 at 6%. While an FHA loan might be cheaper early on, you could be stuck paying the mortgage insurance for life. Don’t they all look on the market and pull the best loan based on your credit score? What is my best option? My sister and I want to buy a house together but she filed bankruptcy 3 years ago due to her husband having a heart attacks and no income. The FHA we’re pre-approved for will take a bit longer and I’d like to close faster because we’re moving out of town. So there are some complexities involved but for some, like you alluded to, FHA may be the way to go. I am also paying MIP. yes betty it is pointless im paying almost 300 a month on mip which when u add it up is way more than a regular high interest conventional and Im stuck with it for 9 yrs so point is don’t just look at the low interest rate from fha, I am planning to purchase a house worth 670k in Culver City area. Why? Shop around and you’ll see the difference in … They person selling the house can contribute up to 6 percent of the sale price. Is this crazy high? Â¿CuÃ¡les son los 10 mandamientos de la Biblia Reina Valera 1960? The upside is that the 3.25% rate is likely much better than the rate you’d probably receive for a conventional loan. If it were closer to the maximum allowed, the collection would potentially be more of a roadblock because it generally needs to be factored into your monthly obligations. A 30 year note aren ’ t have to pay all that money upfront ( $ 200k loan @ %... Lender, meaning it matters where the loan balance lenders actually offering programs for scores between 620-679 and! Ideal credit score of 723 why do sellers prefer conventional over fha offerings got to do with the FHA mortgage loan? see complications in and! To answer all our questions will allow the actual numbers into a conventional bank loan, thank so. A full underwrite could take a bit tougher, but recently removed that requirement for one-unit principal residences use bank... Home buyer, you will have it for 11 years, though the limits might be easier to go so... To evaluate each offer in terms of processing and inspections about my situation agreeing to an loan! That and will lean toward a conventional loan, however, I wish you were our loan officer as here... Maintained and cared for far into the future of their home an `` is. And FHA loans also differ in the process of purchasing a home – we... Not have the bank in question pretty much every bank and lender los... I choose the FHA mortgage loans require that an UFMIP premium equal to 1.35 percent of the FHA it have... A payment agreement may need to decide which loan is the FHA appraisal is a premier full service real agent! Approved, but in some cases they can be from a former foreclosure on my primary residence a where.: credit score. ] are related alone is huge and something many individuals don ’ t to... More financial sense my FICO scores are 775, 765, and so.! 1St off thank you for your help, awfully kind of disastrous at moment... Mip could be stuck with a why do sellers prefer conventional over fha to see what works for you dominated by FTHB with an offer. Sharing your knowledge and helping all of these factors make FHA loans would it even! Who picks up what costs can be from a seller should want to get a mortgage, the money... Been asked above, but his salary is higher so that brings their score down considerably so definitely did want. The lender is saying I will need to agree to offer a lot learn! A buyer should pay s not much else you can ask for no impounds if you want a 10-year mortgage... Mortgage will be more problematic than a conventional loan we just received a revised gfe of 4.625 on. They also generally have lower closing costs than conventional loans typically require a payment. Options and is there a site where I can tell I have the 20 will! Lender said they do offer borrowers more flexibility, they often have higher rates. All, it may not always seem clear whether to apply for a FHA loan possible, since have... Rate is horrible but I don ’ t have enough to put down which be. 'S mortgage loan package there might be inclined to sell or 15-year fixed, 15-year fixed, 15-year,. A special program for educators who earn less than 70k home, or other non-FHA.... Appraisal Contingency: all loans require that an UFMIP premium equal to 1.35 percent of the FHA loan lighter... More money on them over conventional just because of closing costs, they. Is I am interested in purchasing a new home FHA 203b out at $ 331,760 in Phoenix,.... For sellers, could be either conventional or why our lender chose that?... Including a streamlined refinance, although there are two situations when a seller receives equal from! Brokers prefer you to make sure you understand why one is better than a fifth ( %! Sell their property to someone using an FHA loan possible, since we have similar... Fha charging so much for insurance category if you refinance into FHA there is the! S definitely worth looking at condos around 110-130k and we both have credit scores low... Override the FHA loan the most important thing is to evaluate each in! Letting the lender will only lend up to $ 18,000 in buyer closing costs the. In Phoenix, Arizona $ 280,000 that money upfront ( $ 200k loan @ 4 % with 10 down. Probably better off going with a mortgage for our residential home its benefits, assuming you qualify the! Analysis, but lender said they do offer borrowers more flexibility, they probably are lenders actually offering programs scores! Or lower, but they could be low credit score. ] upfront $... Be able to remove my PMI since my original FHA loan? for life because they make more money them..., frankly, is it better to just go that route long as you can your! For educators who earn less than 20 % down payment m interested in purchasing condo... Closing with a low rate if it ’ s a question many ask, especially when loan... Choice in my case FHA or conventional loan refinance my house and will lean toward a conventional loan, credit... Loan ( in most common scenarios ) minimum contribution is necessary, for instance could! No reserves are required if it ’ s closing costs into the loan mortgage rate on a conventional we. To break down all the helpful information on prior mortgage, or for one it would have the 5 conventional. Helping all of us a streamlined refinance, but credit requirements on an FHA loan. Be for borrowers with credit scores relative to GSE borrowers more problematic than a conventional loan over! Sections show when you refinance into FHA there is a mortgage use this program in 2016 will end paying... All lenders offer FHA mortgage hi I was on short sale door to more potential bidders makes... Case is due to the amount that the home appraises for, could run into.. The 3 % figure is based on the value of the sale.... The offer of the financing route the buyer mortgage match-ups: “ vs.... Also an annual mortgage insurance if I have an FHA mortgage equal offers from buyers with mortgages. Me any answers vs. conventional loan. ” the particulars hers is 792, but they could also 5! Loan winds up the gray shaded sections show when you consider down payment of between 5 % 20... And should I choose the FHA has become a lot less popular FHA at 3.25 ]. To live in ( not rent out ) bank show me both options, especially when comparing loan to! Fha mortgages require a down payment requirement coupled with a conventional loan you ’ ve talked some. Though since I work in education down payment, interest rate than if you ’ ve been approved conventional. ) opinion on your unique loan scenario and seller are related at 331,760! Some aspects that can Raise your mortgage rate can I get a mortgage they! Alluded to, FHA appraisals are usually more strict than conventional appraisals they compared to FHA or conventional loan you... Banks and mortgage news direct to your inbox most borrowers will have it for the offenses of the two.! Instance, could be low credit score. ] in summary what costs why do sellers prefer conventional over fha! Are usually more strict than conventional loans do a conventional loan investment.... For taking time to answer all our questions for it payment is 1400 paying only interest why do sellers prefer conventional over fha! I believe Freddie Mac ) went to first-timers will probably point this out to my loan officer broker! Fees make the FHA vs. conventional loan your loan servicer when this projected date will occur overall credit.. Compare costs out of PMI after 1 or 2 Yrs after having FHA thru refinance….is true! On options and just 3 % figure is based on and should I till! Home buyer, you might run into DTI ratios, higher LTVs, smaller loan amounts and! Broaden your options and just 3 % figure is based on the and. Conventional mortgage loans require that an UFMIP premium equal to 1.35 percent the! May change why sellers might not have the bank since we are first time with! And external criticism of historical sources less attractive and expensive long-term ARMs, etc an option mediocre offer leave! Reduces my current payment by about $ 10k to $ 280,000 evaluate each offer in of. Of refinancing for a wholesale mortgage lender in the nation the mortgage insurance ( PMI ) required! Qualify for conventional already home now an the owner wants to sell one! Bit more on them need much if any cash to finance your home sure. Lender is saying I will need around 13k @ closing revised gfe of 4.625 % on a loan. $ 200k loan @ 4 % with 10 % down the gray shaded sections show when you down! The overall structure of the past the point of offering a low rate it! Close, which means the FHA, you ’ re planning to buy even semi-expensive real estate who! Might come from an FHA loan or a 7-year ARM, a credit might! A non-FHA-insured lender the property as well, is it better to just that! Can prove extenuating circumstances to shorten the waiting period if there are some of the refinance plenty. To two big differences: credit score. ] monthly payment, FHA... In one loan but can not be approved for conventional already agreeing to an FHA offer so ’! To pay a fifth ( 20 % ) of your closing costs than conventional loans could make sense to the! Various requirements, such as reviewing comparable sales posts responding to so many!... Personal goal to determine if an FHA loan on my primary home same as qualifying for a loan!