| What
is a Conventional, FHA and VA Mortgage?
A Conventional mortgage
is:
A mortgage that falls within Fannie Mae
guidelines, and covers loans up to predetermined amount. These
guidelines are sometimes adjusted up or down.
A conventional loan with an LTV
(loan to value ratio) of greater than 80% requires primary
mortgage insurance, which can be paid monthly.
A FHA mortgage is:
Similar to a conventional
loan, however: FHA (Federal Housing Authority) insures the loan,
limiting the lender's risk. The borrower pays an upfront insurance
premium which is approximately 1.5% of the loan amount. This money
can be financed directly in the loan amount. The borrower also
pays a monthly premium of .5% of the loan amount divided by 12
months. FHA requires down payment of 3%. This money can be a gift.
No reserves are required.
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