by 
The Curious Bag
-
Conventional mortgages are purchased by Freddie Mac once the loan is closed by a local lender. An FHA mortgage is insured by the Federal Housing Administration. Each type of mortgage has different rules and regulations.
Significance
FHA mortgages were created by the U.S. government to give borrowers a lower down payment and lower credit score option mortgages, as opposed to conventional, Freddie Mac and Fannie Mae mortgages.
Function
Although both types of mortgages allow borrowers to purchase and refinance residences, each has a different maximum mortgage amount. Conventional mortgages are limited to $417,000, and FHA mortgages are limited based upon geographic location.
Time Frame
Both mortgage options have various term or length options, from 10 to 40 years.
Types
Both Freddie Mac and FHA mortgages have fixed and variable rate mortgage options.
Considerations
With both conventional and FHA mortgages, private mortgage insurance is required for borrowers making a down payment of less than 20 percent.
Source:
FederalReserve.gov: Looking for the Best Mortgage
RELATED QUESTIONS
Copyright 2023, Wired Ivy, LLC