CONVENTIONAL VS FHA LOANS

An FHA loan is a mortgage loan that is insured by the Federal Housing Administration (FHA)

So why is an FHA loan a viable option to be considered?

Compared to conventional loans, an FHA loan offers some advantages for borrowers. Some of these advantages are due to recent changes in the rules for FHA loans, along with some changes in guidelines for conventional loans. Here are some things to consider when looking to purchase a primary residence or even if potentially refinancing a current FHA loan:

  • Allowable debt-to-income ratio: this is often higher on FHA loans than conventional loans
  • Waiting periods: If your credit has been impacted in recent years, FHA has the JS Realty Mortgage Loan Approvedfollowing waiting periods that are often much shorter than for conventional loans.

Bankruptcy (Chapter 13) = 1 year
Bankruptcy (Chapter 7) = 2 years
Foreclosure = 3 years [Conventional = 7 years]
Short Sale = 3 years [Conventional = 4 years]

  • Loan Limits: In the DC Metro Area, an FHA loan is limited to $625,500, with a 3.5% down payment. Conventional loans between $417,000 and $625,500 typically require a 10% down payment.

Recently, the FHA reduced the monthly mortgage insurance factors from 1.35% to .85%. This will mean lower monthly payments for purchases and provides current FHA loans to be refinanced with a lower mortgage insurance payment. For example, on a loan amount of $400,000, there is a monthly savings of $161 with the new monthly mortgage insurance payment. In addition, 100% of the down payment can come in the form of a gift from appropriate sources.

Every borrower has a unique need, as far as their loan is concerned. If you have any questions or would like more information, please contact our preferred Lender, Keith Harris at Intercoastal Mortgage Company.

JS Realty KHarris LenderKeith Harris
Senior Loan Officer

NMLS Registry # 838973
Office: 703.259.0788
Mobile: 703.395.6601
KeithH@icmtg.com

 

The JS Realty Team – not only serving Brambleton, serving all of Northern Virginia.

Scott Koval

Author: Scott Koval

Co-founder of JS Realty, Scott has been providing ethical, honest, & fair real estate transactions for more than 11 years. He strives to create a lifelong relationship with his clients and is always available for them. When he's not Pinning gardening tips, Scott spends much of his spare time on golf courses in his area.