Conventional Mortgages With Greater Flexibility Than FHA Loans

While FHA loans are known for their flexibility, some conventional mortgages actually have them beat

Conventional Mortgages With Greater Flexibility Than FHA Loans
April 20, 2016

Potential homebuyers often learn of the many advantages to getting a mortgage through the FHA. These loans offer low down payments and often have low interest rates as well. However, new conventional mortgages may actually offer buyers better options than FHA mortgages, VA home loans, and Rural Housing loans.

These new mortgages are offered by Freddie Mac and Fannie Mae, and they are designed to offer buyers other options that are similar to FHA, VA, and Rural Housing loans, but without the same type of requirements. In fact, the guidelines for these mortgages are more flexible in some regards. With a lower down payment required, more flexible guidelines, and low interest rates, many renters are able to become homeowners more easily.

There are several advantages to using one of the new conventional mortgages instead of one done through a government agency. The first is that conventional mortgages do not require borrowers to pay any sort of funding fee upfront. Government loans require borrowers to pay a percentage of the total amount as a funding fee. While these amounts may be rolled into the loan, they still raise the overall amount a borrower has to pay.

Another benefit to these new loans is that all household income can be used for consideration. Generally, only the income from the actual borrowers is allowed to be listed. With this new option, multi-generational families can put all of their income on the application, allowing them to more easily qualify.

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