{"id":39976,"date":"2013-03-18T15:23:41","date_gmt":"2013-03-18T21:23:41","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=39976"},"modified":"2024-02-08T17:20:59","modified_gmt":"2024-02-09T00:20:59","slug":"2013-03-18-fha-mortgage-vs-conventional-mortgage-2","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/2013-03-18-fha-mortgage-vs-conventional-mortgage-2","title":{"rendered":"FHA vs. Conventional Loan: What\u2019s The Difference?"},"content":{"rendered":"\n<p>There are a few different mortgage programs to choose from, and each one has its own benefits as well as downsides, depending on your financial situation. The two most <a href=\"https:\/\/www.biggerpockets.com\/blog\/4-popular-mortgage-programs-first-time-home-buyers\" target=\"_blank\" rel=\"noreferrer noopener\">popular mortgage programs for first-time homebuyers<\/a> are the FHA and conventional mortgage.\u00a0<\/p>\n\n\n\n<p>Let\u2019s cover the differences between FHA and conventional loans to decide which one is right for you.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What Is an FHA Loan?<\/h2>\n\n\n\n<p>To help those with low to moderate income purchase a home, the Federal Housing Administration (FHA) oversees and backs loans given to those in this income bracket through its FHA loan program. It\u2019s still issued by a bank, but the Federal Housing Administration ensures that these loans are guaranteed, removing much of the financial burden and risk from the lending institution.&nbsp;<\/p>\n\n\n\n<p>This type of loan is popular with first-time homebuyers and can be much easier to qualify for than conventional or other types of loans.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What Is a Conventional Loan?<\/h2>\n\n\n\n<p>Unlike FHA or VA loans, conventional mortgages aren\u2019t backed or guaranteed by the federal government or any other agency. To qualify for a conventional loan, borrowers need to meet more stringent requirements, such as lower debt-to-income ratios, higher down payments, and other terms and conditions of the loan. With this type of loan, you may be able to avoid paying mortgage insurance premiums (MIP).&nbsp;<\/p>\n\n\n\n<p>Some sellers prefer conventional loans from buyers, and your offer could look more appealing if you opt for this type of mortgage and meet the requirements.<\/p>\n\n\n\n\n\n\n  <div class=\"lg:block\" x-data=\"{ ad_block_block_64f9fcb700a31: popAds(1) }\">\n      <template x-for=\"ad in ad_block_block_64f9fcb700a31\">\n        <a\n          :href=\"ad.linkURL\"\n          class=\"no-underline text-black\"\n          x-on:click=\"adClicked('https:\/\/www.biggerpockets.com\/blog\/2013-03-18-fha-mortgage-vs-conventional-mortgage-2', ad.sponsor, ad.title, ad.id, 'blockAdClicked', 'blockAd', '')\"\n          target=\"_blank\">\n          <div\n            class=\"py-4 border-b flex flex-col flex-nowrap text-sm border-t px-0 rounded-none\"\n            x-init=\"\n              analytics.track('blockAdLoaded', {\n                referrer: 'https:\/\/www.biggerpockets.com\/blog\/2013-03-18-fha-mortgage-vs-conventional-mortgage-2',\n                sponsor: ad.sponsor,\n                ad_title: ad.title,\n                ad_page_location: ''\n              })\n            \"\n            x-intersect:enter.once=\"adViewed('https:\/\/www.biggerpockets.com\/blog\/2013-03-18-fha-mortgage-vs-conventional-mortgage-2', ad.sponsor, ad.title, ad.id, 'blockAdViewed', 'blockAd', '')\">\n            <div><span class=\"text-xs text-slate-light block bg-slate-50 p-1 inline-block rounded-md\">Sponsored<\/span><\/div>\n            <div class=\"flex items-center text-sm space-x-4\">\n                <img :src=\"ad.imageURL\" :alt=\"ad.imageAlt\" class=\"h-10 w-10 object-cover rounded-full\">\n\n                <div clas=\"text-sm\">\n                    <span class=\"font-bold block\" x-text=\"ad.sponsor\"><\/span>\n                    <span class=\"text-slate\/80\" x-text=\"ad.description\"><\/span>\n                <\/div>\n            <\/div>\n\n            <div>\n                <span class=\"font-bold\" x-text=\"ad.title\"><\/span>\n                <p class=\"mt-2 text-slate\/80\" x-text=\"ad.body\"><\/p>\n                <span class=\"mt-2 text-themeBlue block mt-2 underline\" x-text=\"ad.linkTitle\"><\/span>\n            <\/div>\n          <\/div>\n        <\/a>\n      <\/template>\n  <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\">FHA vs. Conventional Loan: Credit Score Requirements<\/h2>\n\n\n\n<p>When comparing <a href=\"https:\/\/www.biggerpockets.com\/blog\/2015-06-19-askbp-045-fha-vs-conventional-loans\" target=\"_blank\" rel=\"noreferrer noopener\">FHA loan requirements to conventional loan requirements<\/a>, you have to consider your credit score. Because an FHA loan is aimed at those in a lower income bracket, the minimum credit score requirement is also lower than that for a conventional loan.\u00a0<\/p>\n\n\n\n<p>Here\u2019s a breakdown of the credit score you need to <a href=\"https:\/\/www.biggerpockets.com\/blog\/bank-formula\" target=\"_blank\" rel=\"noreferrer noopener\">qualify for each of the mortgage types<\/a>:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">FHA loan credit requirements<\/h3>\n\n\n\n<p>For an FHA loan, a borrower can have a lower credit score\u2014even in the \u201cvery bad\u201d credit score range\u2014and still qualify. You can have a credit score as low as 500 and still get an FHA loan. However, to also get the low down payment percentage rate, you\u2019ll want to aim for a higher credit score in the 580 range.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Conventional loan credit requirements<\/h3>\n\n\n\n<p>Although you\u2019ll need better credit to qualify for a conventional <a href=\"https:\/\/www.biggerpockets.com\/guides\/ultimate-home-loans-guide\" target=\"_blank\" rel=\"noreferrer noopener\">home loan<\/a>, the minimum credit score required will depend on the lender. As a general rule, conventional mortgages often require higher credit scores of at least 620, which would put you in the \u201cfair\u201d range.\u00a0<\/p>\n\n\n\n<p>Keep in mind that the better your credit score, the easier it is to qualify for a conventional mortgage loan and the better your interest rate will be.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">FHA vs. Conventional Loan: Down Payment Requirements<\/h2>\n\n\n\n<p>Like your credit score, the down payment you need will vary depending on the lender, the type of loan you\u2019re applying for, and the loan amount. The loan-to-value ratio of the property, which measures the value of the property compared to the amount of your loan, will be affected by your down payment. Typically, the larger the down payment you make, the less you have to borrow and the less interest you have to pay over the life of the loan.&nbsp;<\/p>\n\n\n\n<p>Here are the most common down payments for FHA and conventional loans:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">FHA loan down payments<\/h3>\n\n\n\n<p>Since an FHA loan is intended to make it easier for low-income and first-time homebuyers to get into the housing market, the down payment requirement is much lower. Your down payment amount will depend on your credit score and the lender, but for an FHA loan, the <a href=\"https:\/\/www.biggerpockets.com\/blog\/fha-guidelines\" target=\"_blank\" rel=\"noreferrer noopener\">minimum down payment amount<\/a> can be as low as 3% of the house\u2019s purchase price.\u00a0<\/p>\n\n\n\n<p>The standard rate usually falls in the 3.5% range. However, if you have a low credit score that falls between 500 and 579, you might have to put down as much as 10%.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"How to Buy a Multifamily Rental Property with 3.5% Down\" width=\"640\" height=\"360\" src=\"https:\/\/www.youtube.com\/embed\/VyFk2sdw230?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\">Conventional loan down payments<\/h3>\n\n\n\n<p>Many conventional loans require a 20% down payment. If you put down less than 20%, the bank will require mortgage insurance. Private mortgage insurance (PMI) is required when you put down less than 20% because the lender is covering a higher percentage of the home price.&nbsp;<\/p>\n\n\n\n<p>While the PMI is wrapped up in your mortgage payments, you\u2019ll be paying interest on the mortgage insurance premium and the amount you borrow to purchase the home.&nbsp;<\/p>\n\n\n\n<p>Those who have owned a home within the last three years will need a minimum down payment of 5%, but conventional loans can offer some buyers a down payment rate of as low as 3%.<\/p>\n\n\n\n<p>&nbsp;There are many things that go into calculating the amount you want to put down on a new home purchase, and going with the lowest down payment possible isn\u2019t always the best move.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">FHA vs. Conventional Loan: Interest Rates<\/h2>\n\n\n\n<p>This visual graph compares the FHA vs. conventional mortgage down payment and interest rates for a potential homebuyer. The details will help you compare the differences between the two loan types.&nbsp;<\/p>\n\n\n\n<p>Take a look at the short-term and long-term differences.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><a href=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2013\/03\/Fha-vs-Conventional-2.png\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" width=\"635\" height=\"436\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2013\/03\/Fha-vs-Conventional-2.png\" alt=\"Fha vs Conventional 2\" class=\"wp-image-39973\" title=\"\"><\/a><\/figure>\n<\/div>\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><a href=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2013\/03\/Mortgage-FHA-vs-Conventional-1.png\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" width=\"641\" height=\"442\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2013\/03\/Mortgage-FHA-vs-Conventional-1.png\" alt=\"Mortgage FHA vs Conventional 1\" class=\"wp-image-39974\" title=\"\"><\/a><\/figure>\n<\/div>\n\n\n<p>Now let\u2019s break it down a little further to get a better understanding of what these charts mean for your interest rates:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">FHA loan interest rates<\/h3>\n\n\n\n<p>Here are the details of the FHA loan limits in the graphs:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Purchase price:<\/strong> $200,000<\/li>\n\n\n\n<li><strong>Down payment:<\/strong> 3.5% (the minimum down payment for the FHA program)<\/li>\n\n\n\n<li><strong>Fixed interest rate:<\/strong> 3.75%<\/li>\n\n\n\n<li><strong>Term:<\/strong> 30 years<\/li>\n<\/ul>\n\n\n\n<p>You can see that while FHA loans require only a lower down payment of 3.5%, you\u2019ll end up paying more in interest over the life of the loan. Your interest rates will vary depending on the lender and the current rate at the time you borrow, but regardless, you\u2019ll always pay more in interest if you make a smaller down payment.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Conventional loan interest rates<\/h3>\n\n\n\n<p>Here\u2019s a look at the details of the numbers in the graph for a conventional mortgage:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Purchase price:<\/strong> $200,000<\/li>\n\n\n\n<li><strong>Down payment: <\/strong>5% (although 20% is preferred, 5% is common)<\/li>\n\n\n\n<li><strong>Fixed interest rate:<\/strong> 3.75%<\/li>\n\n\n\n<li><strong>Term:<\/strong> 30 years<\/li>\n<\/ul>\n\n\n\n<p>The numbers here are almost identical to those for an FHA loan, with the only difference being the down payment amount. However, you can see that even this small detail can make a significant difference in the interest you\u2019ll pay over the life of your home loan.&nbsp;<\/p>\n\n\n\n<p>Additionally, because you won\u2019t necessarily need to have mortgage insurance, you can save even more on interest in your monthly mortgage payments when you have a conventional loan.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">FHA vs. Conventional Loan: Loan Limits<\/h2>\n\n\n\n<p>Loan limits regulate the loan amount you can borrow. These limits vary based on the mortgage type and the housing cost in the area where you\u2019re buying a home.&nbsp;<\/p>\n\n\n\n<p>Conventional loans have higher \u201cfloors\u201d and \u201cceilings\u201d than FHA loans, but both loan types are based on the average home price in the area. The \u201cfloor\u201d of the loan is the least amount you can borrow, while the \u201cceiling\u201d is the maximum amount for the type of mortgage you want.&nbsp;<\/p>\n\n\n\n<p>Here are the loan limits for FHA and conventional loans:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">FHA loan limits<\/h3>\n\n\n\n<p>As of 2023, the floor for an FHA loan is $472,030, a difference of more than $50,000 over 2022. The ceiling FHA loan limit is $1,089,300, whereas it previously sat at $970,800. These are the minimum and maximum amounts, respectively, that you can borrow when taking out this type of government-guaranteed loan.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Conventional loan limits<\/h3>\n\n\n\n<p>If you want a conventional loan, you\u2019ll need to know the floor and ceiling amounts for these types of loans. Conventional loans follow the conforming loan limits set by the Federal Housing Finance Agency (the same agency that controls Fannie Mae and Freddie Mac).&nbsp;<\/p>\n\n\n\n<p>In 2023, the floor for a conventional loan is $726,200, and the ceiling is the same as it is for FHA\u2014$1,089,300. Some areas may have different floor and ceiling amounts, as this is based on the average selling price of homes in an area.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">FHA vs. Conventional Loan: Mortgage Insurance<\/h2>\n\n\n\n<p>Mortgage insurance is a cost you may have to pay when you borrow money to buy a house, depending on the type of loan and the down payment amount. Many homebuyers with a smaller down payment or a lower credit score will use an FHA mortgage, making it a goal to refinance to a conventional mortgage in the future. Refinancing can eliminate the need for PMI, which FHA mortgages require.&nbsp;&nbsp;<\/p>\n\n\n\n<p>When you refinance, you will need to have your home or investment property appraised, and if you can show 20% equity in the property, you can avoid PMI. It\u2019s not uncommon for a property owner to pay private mortgage insurance since, in many cases, they only pay it for a short period.<\/p>\n\n\n\n<p>You don\u2019t need PMI with conventional loans if you can make the 20% down payment. Those who can\u2019t should plan on having PMI for at least part of the time they\u2019re making loan payments.&nbsp;<\/p>\n\n\n\n<p>This information will help you better understand mortgage insurance requirements for conventional and FHA loans:&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">FHA loan mortgage insurance<\/h3>\n\n\n\n<p>The up-front MIP is a cost that is required with an FHA mortgage, regardless of the amount you put down. This is a cost on top of your typical mortgage closing costs and is usually rolled into your borrowed mortgage balance. So you are paying interest on this over the life of the mortgage. Currently, the MIP charge for a 30-year term is 1.75% of your loan amount.<\/p>\n\n\n\n<p>Mortgage insurance is a monthly payment that\u2019s added on top of your mortgage payment. The FHA program requires you to pay mortgage insurance for at least five years before you can have it removed.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Conventional loan mortgage insurance<\/h3>\n\n\n\n<p>Unlike FHA loans, you only have to pay mortgage insurance with conventional loans until you reach a 78% loan-to-value ratio or have 22% equity in the property. So if you can make a 20% down payment and you have a good credit score, you won\u2019t be responsible for PMI.&nbsp;<\/p>\n\n\n\n<p>The amount of these premiums differ between an FHA and a conventional loan, and typically, you\u2019ll pay more for an FHA loan PMI than a conventional loan PMI. Your PMI percentage can range between 0.5% and 2% with a conventional loan because it depends on various factors related to your finances and credit history.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">FHA Loans: Pros and Cons<\/h2>\n\n\n\n<p><a href=\"https:\/\/www.biggerpockets.com\/blog\/fha-loan-pros-cons\" target=\"_blank\" rel=\"noreferrer noopener\">FHA loans have<\/a> pros and cons; your financial situation will determine if this is the right mortgage.\u00a0<\/p>\n\n\n\n<p>Here are some of the pros and cons to consider before you take advantage of an FHA loan:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Pros<\/h3>\n\n\n\n<p>These are the best parts of taking out FHA loans:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Low down payment:<\/strong> You can put down as little as 3% to 3.5% when you use an FHA loan. This can make saving the money you need easier to get the house you want.<\/li>\n\n\n\n<li><strong>Low credit score:<\/strong> The credit score needed to qualify for an FHA loan is much lower than what you\u2019ll need for a conventional loan. This means that even if you\u2019ve had some trouble with your credit score, you can still be accepted for an FHA loan.<\/li>\n\n\n\n<li><strong>Lenient debt-to-income ratio:<\/strong> An FHA-backed mortgage requires a more lenient debt-to-income ratio than a conventional loan. This means you can have a higher debt load or make less money and still meet the qualification requirements for this type of mortgage.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Cons<\/h3>\n\n\n\n<p>These are the downsides of taking out FHA loans:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Higher up-front costs:<\/strong> Because you have to pay the MIP upfront along with other fees, an FHA loan has higher up-front costs than a conventional loan.<\/li>\n\n\n\n<li><strong>Mortgage insurance:<\/strong> No matter what you do, you\u2019ll have to pay mortgage insurance for at least five years when you have an FHA loan. This increases the amount of interest you\u2019ll pay on the loan amount.<\/li>\n\n\n\n<li><strong>Riskier to sellers:<\/strong> Sellers may see an FHA loan as a higher risk, since approval requirements are less stringent than they are with a conventional loan. So if the seller has two offers to consider, they may choose to accept one from a buyer with a conventional loan over one with an FHA mortgage.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Conventional Loans: Pros and Cons<\/h2>\n\n\n\n<p>Like any other loan, there are pros and cons to using a conventional loan for your mortgage.<\/p>\n\n\n\n<p>Take a look at some of them to help you decide if a conventional loan would meet your needs:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Pros<\/h3>\n\n\n\n<p>These are a few pros of conventional loans:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Avoid PMI:<\/strong> By putting 20% down, you can avoid paying PMI using a conventional loan. There\u2019s no way to avoid PMI with an FHA loan.<\/li>\n\n\n\n<li><strong>Option for more money:<\/strong> Using a conventional loan means you have access to more money. The floor for conventional loans is much higher than it is for FHA loans.<\/li>\n\n\n\n<li><strong>Lower monthly payment:<\/strong> If you use a conventional loan, you might have a lower mortgage payment because you won\u2019t have to pay PMI, and you\u2019ll have to put more money down. You may also have a lower interest rate because you most likely have a higher credit score.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Cons<\/h3>\n\n\n\n<p>Think about these cons before choosing a conventional loan:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Higher credit score:<\/strong> Your credit score will need to be over the 600 range to qualify for a conventional loan. This is much higher than the credit score requirement of 500 for an FHA loan.<\/li>\n\n\n\n<li><strong>Strict eligibility requirements:<\/strong> Some eligibility requirements for a conventional loan are stricter than they are with an FHA loan. Aside from having a higher credit score, you may also need to have a lower debt-to-income ratio and a steady income history, with no bankruptcies or foreclosures.<\/li>\n\n\n\n<li><strong>Riskier to banks:<\/strong> An FHA loan is insured by the government, so lenders might feel more comfortable offering one over a conventional loan. While the borrowing is more stable with conventional loans, some lenders might like the guarantee that comes with an FHA loan.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">FHA vs. Conventional Mortgage: Which One Should I Choose?<\/h2>\n\n\n\n<p>Deciding between conventional and FHA loans depends on your situation and the property you want to buy. While you can <a href=\"https:\/\/www.biggerpockets.com\/blog\/build-real-estate-empire-fha-lending\" target=\"_blank\" rel=\"noreferrer noopener\">build wealth using FHA loans<\/a>, these types are better for buying a primary residence. A conventional loan may be a better option if you\u2019re interested in investing.\u00a0<\/p>\n\n\n\n<p>There are several reasons an FHA loan might work for you, since FHA loans require fewer stipulations and you can get approved if you have a low credit score or don\u2019t have much money to put down.&nbsp;<\/p>\n\n\n\n<p>On the other hand, if your credit score is high and you want to purchase a property with a higher down payment, the conventional loan route might be the best choice.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Frequently Asked Questions<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">What is the Federal Housing Administration?&nbsp;<\/h3>\n\n\n\n<p>The Federal Housing Administration (FHA) is the government agency that provides insurance on mortgages issued by FHA-approved lenders. The FHA backs loans on single-family, multifamily, and residential care properties across the U.S.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Are FHA loans more expensive than conventional loans?&nbsp;<\/h3>\n\n\n\n<p>The cost of the loan depends on the down payment and how much money is borrowed to purchase your property, so an FHA loan could cost the same as a conventional loan. You can use a <a href=\"https:\/\/www.biggerpockets.com\/mortgage-calculator\" target=\"_blank\" rel=\"noreferrer noopener\">mortgage calculator<\/a> to estimate and compare costs.\u00a0<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Why do sellers prefer conventional loans over FHA loans?&nbsp;<\/h3>\n\n\n\n<p>Some sellers may <a href=\"https:\/\/www.biggerpockets.com\/blog\/2013-03-13-sell-to-fha-buyer\" target=\"_blank\" rel=\"noreferrer noopener\">prefer buyers with conventional loans<\/a> because they have more stringent requirements and may be seen as less risky.\u00a0<\/p>\n\n\n\n<p>Additionally, FHA loans may have more strict inspection and appraisal requirements, and sellers will need to address any issues that come up during the inspection or appraisal. Many sellers prefer to avoid potential setbacks, and as a result, may go with a conventional mortgage buyer instead.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Why should someone choose an FHA loan?&nbsp;<\/h3>\n\n\n\n<p>Every borrower is different, and there are a lot of reasons why someone might choose an FHA loan. The biggest reason may be that FHA loans have lower down payment and credit score requirements, which can be helpful for first-time buyers.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Are there other government-backed loans available?&nbsp;<\/h3>\n\n\n\n<p>Yes! In addition to FHA loans, the government also offers Veterans Affairs (VA) loans and U.S. Department of Agriculture (USDA) loans.&nbsp;<\/p>\n\n\n\n<p><a href=\"https:\/\/www.biggerpockets.com\/blog\/va-home-loan\" target=\"_blank\" rel=\"noreferrer noopener\">VA loans<\/a> are for members of the armed services, their spouses, or beneficiaries. VA loans do not require a down payment or PMI. <a href=\"https:\/\/www.biggerpockets.com\/blog\/usda-drawbacks\" target=\"_blank\" rel=\"noreferrer noopener\">USDA loans<\/a> are available for low- to moderate-income buyers who live in rural areas and don\u2019t require a down payment.\u00a0\u00a0<\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_e1612f1fec92e2c5324b4d4e0182d68c\" class=\"visibility-group  hidden\">\n        \n\n<div id=\"hero-block_e2cda4da0b91643f9a06d9529236657e\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-theme-gold-light-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-gold-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Get the Best Loan Today<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">Find trusted, <em><strong>investor-friendly<\/strong><\/em> lenders who specialize in your strategy. <\/p>\n\n\n\n<p><\/p>\n\n\n\n<div id=button-custom-event-block_0d99bb70a08c9197836e72eede0c6926 class='button-custom-event'>\n      <a\n    href=\"https:\/\/www.biggerpockets.com\/business\/finder\/lenders\"\n        x-on:click=\"window.analytics.track('Blog Block | B2C Marketplace Lender Finder', {\n      referrer: 'https:\/\/www.biggerpockets.com\/blog\/2013-03-18-fha-mortgage-vs-conventional-mortgage-2',\n    });\"\n    class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Find a Lender<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Marketplace-Blog-Blocks-Lender-v3.png\" alt=\"investor friendly lender, investor friendly real estate loans\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a\n    href=\"https:\/\/www.biggerpockets.com\/signup\"\n        x-on:click=\"window.analytics.track('Blog Block | Acquisition | Free Membership Signup', {\n      referrer: 'https:\/\/www.biggerpockets.com\/blog\/2013-03-18-fha-mortgage-vs-conventional-mortgage-2',\n    });\"\n    class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Do you really know the differences between an FHA vs. conventional loan?<\/p>\n","protected":false},"author":613670,"featured_media":146967,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7402],"tags":[],"class_list":["post-39976","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-traditional-loans"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/39976","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613670"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=39976"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/39976\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/146967"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=39976"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=39976"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=39976"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}