Deciding which type of loan to get is an important step when buying a home. The two most popular options for first-time homebuyers are conventional and Federal Housing Administration (FHA) loans. Each loan has advantages and drawbacks to consider.
What is an FHA loan?
FHA-approved lenders can issue loans that are insured by the Federal Housing Administration and are ideal for buyers with low-to-moderate income.
Conventional loans aren’t insured or guaranteed by government agencies. They are usually available with fixed or adjustable-rate terms, and may require higher credit scores and down payments than FHA loans.
Differences between FHA and conventional loans
There are several key differences between conventional and FHA loans. Consider the following when choosing the right mortgage for your situation:
Qualifying for loans
Down payment requirements
Private mortgage insurance