MN Real Estate Team

FHA or Conventional Loans for Financing?

For mortgage lending, times are changing and what was the best way to finance your home in the past may not be best for you today. For many years, homebuyers most frequently found Federal Housing Administration or FHA loans the best deal overall, compared to conventional mortgages from traditional lenders. While FHA loans still represent the best option for some buyers, new factors may mean that a conventional mortgage is a better bargain, overall, for those who qualify for them.

As Minnesota’s #1 REMAX Realty team, we constantly keep our eye on mortgage lending, and recent changes have changed the lending environment in ways our homebuyers need to understand. Here are some of the factors for both types of loans that may influence your decision:

FHA Mortgage Costs Have Risen for Minnesota Homebuyers

Conventional Loans May Be Your Best Choice Today

If your credit score is high and you have the down payment, which can be as low as 5% for some loans, and your debt-to-income ratio is under 40%, you may qualify for a conventional loan. The big difference is the mortgage insurance issue. Once you reach the equity requirements, about 20%, most conventional loans allow you to cancel the mortgage insurance, and that means big savings over the term of the mortgage, compared to an FHA loan. Choosing an FHA loan isn’t automatically the right choice today. Before making a choice, look at the bottom line and determine the total cost of your mortgage over its entire term.

Compare Conventional Loans with FHA Loans Carefully

Financing is an important factor in most real estate transactions, and comparing the cost is just one of the things you can discuss with your experienced, knowledgeable REMAX Realtor during your home search. Our help with explaining and discussing every aspect of your home purchase is a good reason to work with Minnesota’s top-ranked realty team. We’re on your side throughout the experience and have the answers you need to make the best decisions. Our highest priority is your satisfaction. We’re always there for you as you navigate the complexities of buying or selling a home.

MN Real Estate Team