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:: FHA or Conventional Loan?
Did You Know that...
- FHA’s first year Mortgage Insurance Premium (MIP) is a full
3% of the sales price, while conventional Private Mortgage Insurance
(PMI) no longer requires payment of an annual premium up-front?
- After five years, a home buyer using conventional financing has
over 5% more equity than an FHA buyer who has financed MIP?
- FHA financing requires more than twice as many documents than
conventional financing?
- FHA requires MIP for 100% of the loan amount (paid for by the
buyer), while conventional PMI requires insurance on only 25% of a
95% loan?
- Seller-paid non-recurring closing costs must be subtracted from
the sales price for FHA (requiring buyers to bring more cash to escrow),
yet can be up to 3% of the sales price for a 95% conventional loan
with no additional cash required of the buyer?
- FHA now has a maximum loan limit of 97.75% of the sales price,
while conventional loans now allow for 2% of the 5% down payment to
be a gift, grant or lender-funded rebate?
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Other Frequently Asked Questions
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