What's the difference between a Conventional and an FHA Mortgage?
posted by Bankruptcy Home Loans @ 1/23/2006
Monday, January 23, 2006
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1 Comments:
A FHA mortgage has up-front mortgage insurance of 1.5% of the loan amount and is added right to the loan. For example a 100,000 FHA loan would actually be 101,500 after mortgage insurance was added. The payments are calculated of the total loan amount. Also FHA has a monthly mortgage insurance premium as well. Using the 100,000 loan example the motrgage insurance premium would be $41.66.
A conventional mortgage has no up-front mortgage insurance, but does have a monthly premium. This premium is determined by the loan to value(LTV). The mortgage insurance rate varies at the following LTV's 100%, 97%, 95%, 90%, and 85%. No mortgage insurance is required for 80% or less. Assuming a 3% down payment, the mortgage insurance on a 100,000 loan would be $83-$86.
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