a 30-year FHA at 3.375%, a 15-year conventional at 3.125%, a 30-year conventional at 3.5%, a 30-year FHA high-balance.
Conventional mortgages generally pose fewer hurdles than FHA or VA loans, which may take longer to process. Their competitive interest rates and loan terms usually result in a lower monthly.
Conventional, FHA, and VA loans are similar in that they are all issued by banks and other approved lenders, but some major differences exist between these types of loans. Read on to learn more about the different characteristics of conventional, FHA, and VA loans as of 2017, and find out which one might be right for you.
Conventional loans are the most common types of loans in the mortgage industry. They’re funded by private financial lenders and then sold to government-sponsored corporations Fannie Mae and Freddie Mac. These loans have stricter requirements than FHA loans.
FHA loans are normally priced lower than comparable conventional loans. Also FHA loans are assumable loans; this may be a particularly good future resale point if the borrower would have an existing low interest rate on the home they are selling. That interest rate and mortgage balance can be assumed by a new buyer.
A conventional loan, or conventional mortgage, is not backed by any government body like the FHA, the US Department of Veteran’s Affairs (or VA), or the USDA Rural Housing Service. Roughly two-thirds of US homeowners’ loans are conventional mortgages, while nearly three in four new home sales were secured by conventional loans in the first quarter of 2018, according to Investopedia.
Federal housing administration (fha) home loans are insured by the government, while conventional mortgages are not. Additionally, borrowers tend to have an easier time qualifying for FHA-insured mortgage loans, compared to conventional.