What is the difference between a conventional and a FHA mortgage?

A conventional mortgage is when you borrow the mortgage money from a lending institution, and they loan you their own money. A conventional mortgage usually requires a 20% down payment.





An FHA mortgage is when you borrow the mortgage money from a lending institution, and they loan you their own money. The difference is that if you qualify for, and obtain an FHA mortgage, the Federal Housing Administration (FHA) guarantees the lender that they will make up the difference between the money you put down (low down payment) and the normal 20% down payment if you default on the loan. Some FHA loans can be obtained with 5% down, and some as low as 3% down. The house and the borrower both have to meet FHA guidelines.





There are many other differences, but this is the basic difference between FHA %26amp; conventional mortgages.What is the difference between a conventional and a FHA mortgage?
A conventional mortgage usually means that you have 20% of the purchase price as a down payment and that you have excellent credit scores.


An FHA mortgage is a mortgage that is backed by the government in case a borrower defaults on the loan. This way


the lender is not on the hook for the amount of default. These


loans do not require a large down payment (usually 3%) and credit scores can be much lower than conventional.What is the difference between a conventional and a FHA mortgage?
conventional loans are not secured or guaranteed by a government agency. The lender assumes the full risk of default.


FHA loans are insured by the government and the purpose it to stimulate housing.


I personally feel better about FHA loans because their guidelines are more strict, but as a consumer, a conventional loan can also be quite good, just make certain you read and understand the terms
Along with an FHA loan you can also qualify for Down payment assistance programs such as Ameridream. FHA loans are becoming more common now because of all the foreclosures, lenders are worried.
The percentage down payment required and the percentage of front and back ratios allowed.