Choosing a Mortgage: FHA vs Conventional

Learn more about Mortgage Lending at http://www.NewAmericanFunding.com

Conventional Mortgages When you’re choosing a mortgage, you have many different types of loans to choose from. However, most mortgages can be classified as either Conventional or FHA. Conventional mortgages are simply loans that are backed by a mortgage banker like New American Funding, rather than the government. Typically, conventional loans will require buyers to have good credit and savings, but you can always find a loan to meet your exact needs.

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What Is an FHA Loan? An FHA Loan is just like other loans, except that the loan is guaranteed by the Federal Housing Authority (FHA), instead of your issuing bank. This gives lenders freedom to offer financing to homebuyers who might struggle to meet the requirements of a conventional loan. This makes an FHA loan an attractive option for many first-time homebuyers.

• Down payments as low as 3.5% • Can use gift money for down payments • Can receive help with closing costs • Minimum credit score as low as 560 • Lower closing costs and monthly mortgage

insurance • Can be used for home improvement,

refinancing or home purchase

Comparing Loans

Conventional Mortgages

FHA Mortgages

Typical Down Payment of 5 - 20% Down payments as low as 3.5%

Minimum Credit Score: 640 Minimum Credit Score: 560

Mortgage Insurance Not Required for Down Payments over 20%

Mortgage Insurance for Life of Loan for Down Payments under 10%

Loan Limit: $417,000 in most areas Loan Limit: 115% of media home price in your area

Repay Loan Faster Strict appraisal guidelines

Fixed and Adjustable Rates available Fixed and Adjustable Rates available

Suited for buyers with good credit and larger savings

Tailored for buyers who may have poor credit and need more financing

New American Funding - FHA vs Conventional: Choosing the Right Loan for You

Recent Changes to FHA Loans In 2014, the FHA made a number of changes to their mortgages guidelines, and it may make buying a home with an FHA loan less desirable for many buyers. Here are the biggest changes to the program.

• Nationwide loan limits decreased to $625,500 • In low-cost-of-living areas, the limit

decreased to $271,050 • Borrowers who pay less than 10% down must pay

ongoing monthly mortgage insurance premiums for the life of the loan.

• Still must use an FHA-approved lender like New American Funding

New American Funding Loan Options

What You’ll Need FHA loans are typical offerings for many first-time homebuyer programs, but you’ll need to work with your loan officer to choose the right loan for you. But even if you decide to go with a conventional loan, here are some things that will be required by any loan:

• At least two years of work history for an FHA loan • Improved credit history and history of timely rent

payments • A strict budget for payments and saving • Down payment of at least 3.5 – 5% • Pre-approval for a loan from a lender like New

American Funding

New American Funding Loan Options

Choosing a Mortgage: FHA vs Conventional

Learn more about Mortgages at http://www.NewAmericanFunding.com