Which is better? Conventional Mortgage, FHA Loan Or a VA Home Loan?

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Not sure which is better. I have close to a 700 credit score, about 25k for a down payment. Looking for a condo in NY. Any suggestions?

  1. Reply
    Searchlight Crusade
    January 22, 2011 at 2:03 pm

    What price condo in New York?

    If you qualify for an A paper conventional loan, especially conforming, those are the very best rate/cost tradeoffs. Always.

    VA and FHA are good for low to zero down payments, or marginal to poor credit, but have an absolute limit of $ 417,000 (conforming loan limit). If you’ve got a $ 25k down payment on a $ 600k condo right now, you’re SOL as far as VA and FHA go.

    I can’t think of a situation where FHA beats VA. VA has no financing insurance requirement, and can even roll up to 3% closing costs in, if you need to.

    If that condo is anything up to $ 250k (10% down), you’re likely to get a better loan conventional. If it’s over (but you can still afford the loan), A VA is likely to prove the best alternative.

    And bless you for serving!

  2. Reply
    January 22, 2011 at 2:27 pm

    Before you consider going to a broker, research rates from your credit union, the VA and banks. As a customer, you stand a better chance of getting a good rate. A conventional loan is ALWAYS better than an ARM (often have teaser rates to suck you in), especially today given the market. Keep in mind however, that a conventional loan has stricter guidelines than the other “fad” loans. The benefit of the conventional is that your payment will always be the same over the life of the loan, there are no suprises, adjustables etc. (barring any additions to the mortgage such as escrows for taxes and insurance). Expect to put down at least 10%, closing costs in NYS are approximately 6%, which you can have rolled into your loan for a few bucks per month. Remember the lower your down payment, the HIGHER your montly mortgage will be. Additionally, with anything lower than a 20% DP you will be required to pay PMI – Private Mortgage Insurance but the upside to that is that when you have built 80% equity into your property, you can apply to have the PMI removed.
    Also, if you purchase a condo, you must ask about the rules and more importantly – how much the MAINTENANCE FEES are a month, sometimes they are equal to a mortgage itself.

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