FHA Vs. Conventional: Round 1. Who will come out on top for the best loan? Who has the lower rates? Who has the lower fees? The back-story: The conventional 30 year fixed is sponsored by Fannie Mae and Freddie Mac, two big power player. FHA just has one sponsor; Federal Housing Authority. Each has its strengths and weaknesses; who will come out on top of this epic battle? For more information about either program please feel free to contact me.
Down payment:
FHA: 3.5% for single family, condominium, duplex, triplex, and fourplex.
Conventional: 3% for single family, most condominiums but then things change. Duplex require a 20% down payment and triplex and fourplex require a 25% down payment.
And the winner of round 1 is: For a single family purchase look at the conventional first and then the FHA loan. For 2 to 4 unit purchases the FHA is the winner by a wide margin if minimizing your down is the priority. Conventional loans with more than 20% down don't require mortgage insurance; that will be a cash flow consideration for buyers with the ability to place a large down on their purchase.
Another thing to consider with regard to the down is that the largest the down the lower the payment and the more likely the property is to cash flow.
Tomorrow we will look at mortgage insurance premiums which can tend to be complicated.
Today's story proves that when you set a goal, most thing are possible.
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