What is the difference between conventional financing AND Federal Housing Administration (FHA) Loans?
Is there a different amount that you have to put down as a down payment for each.
I’m not a lender, but a REALTOR. I believe we will be seeing modifications in all the loan programs soon. But as far as I know:
FHA requires owner occupancy, the required amount of 3 – 3.5% buyer participation (part required to be used as Down Payment, and part can be used for closing costs), allows for “gifts” for help with expenses in buying. Property must appraise for the sales price. Increased maximum loan amounts in place thru 12/31/08 vary according to the average local housing prices. FHA loan limits used to be very low compared to housing prices, but were increased. Gov. may or may not extend current loan limit amounts. FHA has restrictions on loans to purchase condos depending on percentage of units that are owner occupied. Used to have more lenient debt to income rations than conventional loans.
Conventional loans now require larger down payment – I’ve heard 10% is the minimum and a minimum credit score. Stricter debt to income ratios back in place, I think. Property must appraise for the loan amount. Much higher loan amounts than FHA for “conforming” loans.
USDA – allows for 100% financing, but is restricted to owner occupied in certain “rural” areas based on 2000 census and has income restrictions.
business financing : Federal Grants for Starting a Small Business