At Evolution Mortgage, we help tons of first-time home buyers simplify the home buying process and as CPA’s, we make sure we do everything we can do get them into the best loan for them. We believe that is always a Conventional loan. Let us run the numbers for you, try and get your credit score up as much as possible and get you out of an FHA loan and into a conventional mortgage. Here is why!!!

FHA vs Conventional.  What is the true difference?  Easy Bullet points

FHA

• Easier to qualify for due to less income, credit restrictions
• 5% down is the minimum down payment and can be made on any 1-4 unit home
• Mortgage insurance is very expensive and paid 2 times
  • Once monthly and once at closing for a onetime fee of minimum of 1.75%

Conventional

• Superior loan for “more qualified” borrowers but has tougher income and credit guidelines
• Can go down to a 3% down payment if a first time home buyer
• Mortgage insurance is only paid one time – monthly or built into the interest rate

Talking numbers, FHA is a highly insured loan.  You pay mortgage insurance once at closing and again monthly, often for life the whole life of the loan, it never falls off.  FHA mortgage insurance is something people should be trying to avoid at all costs.  It is expensive, non-tax deductible and is money NOT going towards your principal/equity in your homes

Conventional is by far the superior product if you qualify for it.  The mortgage insurance is paid only once, tends to be cheaper depending on credit score and falls off in time (not there for life). Iff your credit score and income are strong enough, Conventional is the right program for you.

So here’s the bottom line. If you are pre-approved or your loan is looking to be an FHA mortgage, make sure you exhaust all opportunists to go conventional.  Many times, I have had borrowers come to me with bogus FHA pre-approvals when they are clear cut Conventional Candidates, and we have saved them a whole lot of money.

Some guidelines:

3% down payment          –              credit score is 740 +        –              Go conventional if income qualifies

5% down payment          –              credit score is 720 +        –              Go conventional if income qualifies

10% down payment        –              credit score is 660 +        –              Go conventional if income qualifies

Ask the right questions. Work with trusted professionals and is trying their best to put you in the right mortgage loan.  Call Evolution Mortgage Brokers and CPA’s TODAY to see if your FHA loan you are being pushed into, is truly right for you.