FHA Financing vs. Conventional Loans
If you want to know the difference between conventional mortgages and Federal Housing Administration (FHA) financing, the first item up for discussion is typically the cost of each loan.
/aFor instance, the Wall Street Journal tells us that “conforming mortgages, or those that can be bought by Fannie Mae or Freddie Mac, commonly require higher down payments than FHA loans require. The catch to an FHA-insured loan is that you’ll pay more in fees.”
Later the Journal explains that “borrowers don’t face those costs on a conforming mortgage with 20% down.” (See: FHA Powers What’s Left of the Home Market, March 6, 2011)
Well, sure, but how realistic is this comparison for most borrowers?
Apples & apples