“The biggest difference between FHA and conventional would be the down payment. FHA rates typically are lower and more flexible for less down,” says Phil Crescenzo Jr., vice president, southeast division, for Nation One Mortgage Corporation.
For buyers who have the ability to bring a 20 percent down payment to the table, there would be far less benefit in seeking an FHA mortgage, unless they’re not able to qualify for a conventional mortgage because of either credit score issues or a previous bankruptcy, says Crescenzo. “In those cases, an FHA loan would be an option, but only if it was due to approval” problems.
Of course, the lower down payment comes at a cost: “Most FHA loans carry mortgage insurance for the duration, which is a drawback to some,” says Crescenzo. However, the premiums may be lower than those you’d incur on a conventional mortgage with less than 20 percent down,”as this cost is capped with an FHA loan.”
