FHA and Conventional are the two most common Colorado home loans. Compare down payments, credit requirements, mortgage insurance and which one fits your plan.
Ask any Colorado mortgage professional what first-time buyers use most and the answer is FHA or Conventional. Both are 30-year fixed loans most of the time. The difference is in the details: who they are designed for and what they cost over the life of the loan.
FHA is the government-insured workhorse that opens the door with a 3.5 percent down payment and credit scores in the 500s with a 10 percent down payment, or 580 and up for 3.5 percent in most lender guidelines. It is forgiving and predictable.
Conventional is the private-market loan with 3 percent down available to first-time buyers in many programs, and it rewards stronger credit and bigger down payments with better rates and no government insurance premium.
FHA loans carry an upfront mortgage insurance premium plus an annual premium. If your down payment is under 10 percent, FHA mortgage insurance generally stays for the life of the loan.
Conventional loans with less than 20 percent down carry private mortgage insurance, but it drops off automatically once you reach a certain equity level, or when you refinance. For buyers who plan to build equity and move up the ladder, that off-ramp is valuable.
The conversation should not be FHA versus Conventional in a vacuum. It should be which loan fits your 0 to 3 Properties plan: how long you will stay, how fast you will build equity, and what comes next.
Veterans and active service members should rarely settle for FHA or Conventional when the VA loan offers a zero-down option with no monthly mortgage insurance. It is the strongest program in the country for those who qualify.
Buyers in eligible rural areas may find USDA 100 percent financing. And Colorado's CHFA programs pair FHA, VA or USDA loans with down payment assistance up to $25,000, which can beat both FHA and Conventional for the right buyer.
Johnny works with all of these programs and will tell you which one actually saves you money, which is often not the one you assumed. Let him compare your real numbers.
Colorado mortgage professional, active investor and landlord, and founder of The Real Estate Ladder. He has owned, lost and rebuilt real estate wealth, and now helps Colorado homeowners climb from 0 to 3 properties, one smart mortgage at a time.
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