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FHA loan credit requirements

Here is a quick comparison of the two programs:

Conventional Advantages

  • Potentially higher purchase price
  • Does not require a funding fee
  • Mortgage insurance is cancelable

Conventional Disadvantages

  • Higher score requirements (620 score required)
  • Seller may only contribute 3% towards closing costs
  • Mortgage insurance is not required if you put down 20%

If you would like to discuss an FHA loan, please click here to contact an alliance member

FHA Advantages

  • 580 FICO score requirement
  • 3.5% down payment
  • Down payment can be a gift from a friend or family member
  • FHA allows a “non-occupying” co-signer
  • Sellers can pay up to 6% & title towards the closing costs
  • Higher allowed debt-to-income ratios
  • Much easier to qualify for an FHA loan
  • FHA loans are assumable mortgages
  • The FHA mortgage rate is lower than a conventional mortgage

FHA Disadvantages

  • Potentially lower loan limits
  • Upfront PMI and monthly PMI is required
  • Mortgage insurance is required regardless of down payment

Conv vs. FHA Recap:

These are just a few of the advantages/disadvantages of these loan programs. Please ask your Alliance Lender for more information so you can decide which program fits your needs the best.

If you would like to discuss an FHA loan, please click here to contact an alliance member