You’ve been looking for a new home and considering the possible ways to finance it. You know you’ll need to take out a mortgage and have narrowed it down to either a conventional or FHA loan. However, you’re having some trouble deciding which one is best.
First, we recommend that you set up a time to meet with one of our loan professionals at GVC Mortgage. That’s the simplest way for you to talk through your loan options.
However, if you need the basic difference between the two loans, keep reading.
Conventional Home Loan
A conventional mortgage—also called a conventional fixed-rate mortgage—has a set interest rate for the life of the loan. You can get a conventional mortgage for 10-, 15-, 20-, or 30-year terms. A few of the benefits of a conventional loan include:
- Consistent interest rates
- Lower fixed interest rates than many other loan types
- Less documentation required for approval
- Speedier processing
- Refinancing available (if you determine you want to change the terms)
Note that conventional loans typically requires at least a 5 percent down payment and often 20 percent or higher.
An FHA loan is a mortgage insured by the Federal Housing Administration. With this type of loan, mortgagees play mortgage insurance to the lender, which provides a safety net to lenders if the home buyer cannot follow through on the loan terms. Many buyers opt for an FHA loan for the following reasons:
- Don’t require perfect credit scores
- Lower down payment requirements
- Attractive interest rates
- Flexible qualification standards
The FHA loan is often popular for first-time home buyers or households whose housing costs take a large portion of their monthly income.
Find Out More
To find out whether a conventional or FHA loan is best for your home purchase, contact GVC Mortgage today at (317) 564-4906. GVC Mortgage has helped Indiana home buyers in and around Carmel, Indianapolis, Fishers, Westfield, Noblesville, and the surrounding areas since 1996. Let us schedule a time for you to meet with one of our loan professionals and find the right financing option.
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