· Jen- First time homeowners are primarily using FHA loans to purchase their home because it only requires a minimum of 3.5% down versus a conventional loan which would require at least 5% down. Some disadvantages of an FHA loan would be that since it is a government insured loan, there is a lot of red tape that has to be crossed prior to settlement.
Refinance Fha Loan To Conventional An FHA loan allows you to buy with as little as 3.5% down-but its total cost is. cost, you'll find other differences between an FHA loan and a conventional one. FHA loans, because they're one of the most expensive types of mortgages.
The FHA loan limits are, in general, higher than those for conforming loans. The FHA mortgage program currently has less strict credit score requirements; however you still need to meet their.
Reverse mortgages have many potential disadvantages. But these won’t be a problem. And because they are insured by the Federal Housing Administration (FHA), borrowers must pay mortgage insurance.
Downside: Possible Disadvantages of Using an FHA Loan 1. You’ll pay a mortgage insurance premium. Two of them, actually. 2. You’ll encounter some property restrictions. 3. Some home sellers shy away from FHA loans.
An FHA loan is more lenient in its credit requirements than a traditional loan, which means you will be dealing with buyers who may run into issues getting the loan finalized. FHA loans can accommodate buyers with credit scores as low as 580 with a 3.5% down payment, where a traditional loan usually requires at least a 620.
Conventional Mortgage Loan 15-Year Conventional Loans – Because mortgage rates have been so low recently, more home buyers and homeowners have opted for the 15-Year conventional mortgage. The 15-year loan pays down much more aggressively than the 30-year loan, and 15-year payments are often the same price as a 30-year a few years ago.
Check out Mike's terrific article on FHA Loans v.s conventional loan products.. The benefits of FHA's flexibility far outweigh any disadvantages.
Another downside to FHA loans is that they come with minimum loan amounts, depending on property size and location. Buyers who are interested in an FHA loan will want to first check what the loan limits are for their county.
But there are situations where an FHA loan could actually be a disadvantage to the seller. This is especially true if a person is selling a house that has a lot of issues, such as peeling paint, damaged stairs, or other items in disrepair.
FHA loans have something similar to PMI, which is referred to as MIP or a mortgage insurance premium. Nevertheless, the amount of 0.5 percent is the same when charged to buyers on a home regardless of the term used to describe it.