The difference between an FHA Loan and a Conventional Loan.

The Lawhead Team knows there are many different types of loans one can apply for when buying a house. We would like to compare the two most common loans, Conventional loan and FHA loan, for our readers.

An FHA loan is a loan which is backed by the federal government and issued by participating lenders. With a conventional loan there is no such guarantee and the risk is assumed by the lending bank or other loan stakeholders.

A conventional loan lender will follow stricter Fannie Mae and Freddie Mac underwriting guidelines which require good credit, strong financial status and lower loan-to-value ratios. On the other hand, because of government intervention with an FHA loan, you must go through a more complicated approval process.

Conventional Loans vs. FHA loans –