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FHA or Conventional? 3 Factors That Can Decide
FHA or conventional? Credit score is only part of the answer. Debt load and even whether a spouse is on the loan can change which option fits better. Here are three factors we look at when comparing the programs.
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Read the transcript
So which is better - FHA or conventional? That answer can change based on some details you might not expect.
Credit score is usually the first thing I look at. As a general rule, if a buyer's score drops below 720, I want to compare both options. Conventional private mortgage insurance gets more expensive as credit scores decline, while FHA mortgage insurance doesn't work that way.
Debt load matters, too. FHA can sometimes accommodate a higher debt-to-income ratio, particularly when the buyer has a strong credit profile.
And here in Texas, a non-borrowing spouse can make a big difference. With a conventional loan, we ignore both the spouse's credit AND the spouse's debts. With FHA, we can ignore the credit score, but because Texas is a community-property state, we still have to count the spouse's debts.
Those are just three reasons the right answer really does depend on the borrower.
And remember - it's always okay to ask. We're here to help you get home.