One of the most appreciated benefit is a lower down payment compared to a conventional loan.
Please talk to your mortgage broker for the requirements to qualify for a FHA loan. Below you find some helpful links:
Conventional Loan Benefits
The big advantage of conventional loans is that they often do not come with the amount of stipulations that FHA loans do. For example, with FHA loans, if you refinance or sell your house, you will lose all of the money that you saved by going into it in the first place. Through prepayment penalties and other costs, it may actually cost you more. The rules and regulations are far less strict with conventional loans in many cases.
Conventional Loan Drawbacks
There are many things that would qualify as a drawback of a conventional loan. For one thing, it is much more difficult to qualify for a conventional loan. The bank is basing everything on your personal credit and guarantee. With an FHA loan, the government is standing behind the loan, so you are more likely to be approved. With conventional loans, you will be forced to qualify on your own merit.
FHA Loan Benefits
FHA loans have many benefits over conventional loans. For one thing, the down payment on the house will be much lower. The down payments are low enough that almost anyone can qualify. With conventional loans, you may need a lot of money in savings in order to make the down payment to get the house.
Another advantage of FHA loans is that you can secure a lower interest rate. Since the government is backing the loan for you, they will also provide you with a lower rate. Anytime you can secure a low interest rate, it is definitely to your advantage. You can save thousands of dollars over the life of your mortgage.
The approval process is also different for this type of loan. The FHA will approve more applications than a traditional lender. If you have questionable credit, you may be approved by the FHA when you would not be approved by a regular lender.
FHA loans also has more flexible repayment terms available. You can get a loan with a number of different repayment options and payment plans. Whether you want a 30-year fixed rate mortgage or a reverse mortgage, the FHA has options for you.
FHA Loan Drawbacks
The FHA is a government program and anytime you deal with government programs, you know that there will be some problems. You will have to go by their guidelines and regulations throughout the whole process. You will be saddled with prepayment penalties and other hassles that you may not be used to with a conventional mortgage lender.
The main advantage of an FHA loan is that you can have a lower down payment, gift funds can be used for down payment & closing costs and also you can get approved with a lower credit score than a conventional loan. Please feel free to call me with any questions and I'd be happy to run some scenaris for you so you know which loan is the best one for you.
FHA mortgages are easier to qualify for mortgage insurance then conventional.
Lower down payment and you end up with a loan that can be assumed by someone who qualifies in the future if you sell before the loan is paid off. With today's interest rates being so low this could be an advantage if you sell in the future and rates are higher at that time.
All the best,