Conventional And FHA Loans Present Some Intriguing Differences In Various Aspects


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When it comes to comparing Conventional and FHA mortgages, there are some interesting contrasts to consider. Let’s take a closer look at some key differences between the two:


Conventional loans allow for gifted reserves, while FHA loans do not. Additionally, FHA loans require a 60-day seasoning period for reserves.

Minimum Borrower contribution on primary 2-4 units

With Conventional loans, borrowers must contribute a minimum of 5% of their own funds towards the down payment on primary 2-4 unit properties. On the other hand, FHA loans allow the entire down payment to be gifted.

Non-occupying Borrower

Conventional loans allow for non-occupying borrowers to be anyone, while FHA loans restrict non-occupying borrowers to family members as defined by guidelines.

Gifts given by Employer

While gifts given by employers are not allowed for Conventional loans, they are permitted for FHA loans.

Rental income on a purchase transaction

For Conventional loans, a 12-month history of rental income must be verified or no rental income may be used on the subject property. In contrast, FHA loans do not require a current housing history for rental income.

These are just a few of the differences between Conventional and FHA mortgages. It’s important to understand these distinctions when considering which type of loan is right for you. If you have any questions or need further information, feel free to reach out to us here at MortgageDepot.


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