Whether you’re considering refinancing your existing home or purchasing a new one, comparing loans side by side can help you weigh your choices. When applying for an affordable lending program, you may choose a loan backed by the government, such as an FHA loan. You may also select a conforming or conventional loan. This non-government loan “conforms” or meets the Federal Housing Finance Agency (FHFA) requirements and the funding criteria of Freddie Mac and Fannie Mae.
FHA loans have their advantages. They offer options to borrowers with lower minimum down payments and credit scores. In certain circumstances, such as if you have good credit and a qualifying debt-to-income ratio, conventional mortgage loans could be a better choice. Here’s a look at the factors to consider when deciding between a conventional loan versus an FHA loan.