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COMPARING FHA WITH CONVENTIONAL MORTGAGES
CRITERIA
Minimum FICO credit score
Minimum down payment
Mortgage insurance
CONVENTIONAL MORTGAGES
Typically no lower than 620
As low as 3 percent, but 5 to 20 percent is typical
Monthly payments are required if you have a down payment of less than 20 percent, but generally, the insurance can be canceled when your loan-to-value ratio reaches 80 percent.
FHA MORTGAGES
Typically as low as 580
As low as 3.5 percent
Upfront and monthly payments, sometimes for the duration of the mortgage term, are required.
HOME READY COMPARISON TO FHA
BENEFITS
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Required down payment
Cancellable mortgage insurance*
Immediate appraisal orders from lenders
Free from geographic restrictions on loan amounts
Day 1 Certaintyâ„¢ freedom from reps & warrants available
HOMEReady
3%
Yes
Yes
Yes
Yes
FHA
3.5%
No
No
No
No
CONVENTIONAL VS. FHA VS. VA LOANS:
A SIDE BY SIDE COMPARISON
CRITERIA
Minimum down payment requirement
Minimum credit score requirement
Upfront mortgage insurance fee
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Suitable for
CONVENTIONAL
3% of purchase price; at least 20% to avoid private mortgage insurance (PMI)
620
None (a monthly PMI fee applies with less than 20% down)
Borrowers with excellent or good credit
FHA
3.5% of purchase priceÂ
580 with 3.5% down; 500 with 10% down
1.75% of the loan amount upfront, plus a variable annual fee
Borrowers with high DTI or low credit scores
VA
0%Â
No minimum
Upfront VA funding fee of 1.25% to 3.3% of the loan amount
Veterans, military service members and spouses