Friday, September 7, 2012

Conventional Vs. FHA Loans

Here are the main differences between conventional loans and FHA loans:

Conventional Loans
  • Minimum down payment is 3% of the purchase price.  You can get a cheaper rate if you put 5% down.
  • You need mortgage insurance if you don't have 20% down.  The mortgage insurance is paid to a Private Mortgage Insurance company.  The premium for mortgage insurance depends on your down payment and your credit score.
  • There is no limit to the size of the loan.  If it is $417,000 or more, it is called a jumbo loan and you need a larger down payment.
  • You get the cheapest interest rate if your credit score is 740 or higher. 
  • The maximum debt-to-income ratio is 45%.

FHA Loans
  • Minimum down payment is 3.5% of the purchase price.
  • You always have to pay mortgage insurance for the first 5 years, regardless of how much you put down.  The premium for mortgage insurance is the same for everyone, regardless of their credit score.
  • The maximum loan size depends on the county you live in.  For Metro Denver counties, it is $406,250.  For Boulder County, it is $460,000.
  • You get the cheapest interest rate if your credit score is 640 or higher. 
  • The maximum debt-to-income ratio for most lenders is 50%.
Make sure your lender is allowed to sell both conventional loans and FHA loans (not all lenders are), and then ask them which one is going to be cheaper for you.


Getting a loan approved is easy - if you know what to do.  The Mortgage Experts know what to do!!!

Make sure you check out our web site:



By the way, don't forget to refinance your current mortgage.  Rates are very, very low right now.  Don't miss out!  Call us today to get the details for your particular situation.

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