What’s the difference between an FHA Loan vs a Conventional Loan? One of the main differences is the down payment amount.

FHA Loan vs Conventional Loan Comparison.

Are backed by the Federal Housing Administration, which allow down payments as low as 3.5%.

This is the preferred home program for first-time home buyers with a low credit score.
The Federal Housing Administration (FHA) allows down payments as low as 3.5% for those with minimum credit score of 580 or higher.
The FHA will insure loans for borrowers with scores as low as 500, but requires a 10% down payment for a score that is that low.
Mortgage Insurance is required for the life of an FHA Loan and can’t be canceled.
DTI (debt-to-income) ratio 45% (can be as high as 50%)
100% of down payment can be a gift
Allows down payment assistance programs

Aren’t backed by the government, offer down payments as low as 3% to first-time home buyers with good credit.

This is the preferred home program for first-time home buyers with a high credit score of 680 or higher.
Available in fixed-rates, adjustable rates (ARM’s) with loan terms 10 to 30 years.
Can be used to buy a primary residence, second home or rental property
Mortgage Insurance is cancelable when home equity reaches 20% (unlike FHA which lasts the life of the loan, in most cases)
DTI (debt-to-income) maximum ratio 43%
Only part can be a gift if down payment is less than 20%
Does not allow down payment assistance programs

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