aRTICLES

The fundamental distinction between conventional and FHA loans is that the government does not guarantee conventional loans. FHA loans are backed by government money, giving lenders additional protection. Because the risk to lenders is reduced, FHA loans are more straightforward to qualify for. A comparable lender protection may be required for conventional loans. However, this coverage is obtained as private mortgage insurance.

Borrowers should know that FHA mortgage loans are only available to owners who intend to live in the home. You cannot use an FHA loan to finance a home if you do not plan to live there. These loans are not meant for investment homes or commercial properties where the home’s residential aspect takes second place to the property’s non-residential purposes. Conventional loans may provide more flexibility in this regard.

FHA loan standards allow for financing a multi-unit property (up to four units) as long as the borrower intends to live in one or more of the units. In this case, renting the others is acceptable if the occupancy restrictions are met.

When a self-employed person applies for a mortgage, loan officers often think of two words: high risk. There is a common misconception that self-employed borrowers have less dependable income than salaried employees. As a result, self-employed mortgage applicants often have to achieve a greater level of lender standards to receive a mortgage loan. However, it is possible.

Before looking for a mortgage, you should assess your company and personal finances. To assist the lender and yourself throughout the mortgage application process, keep note of whether you have submitted personal vs company income separately or jointly. Simply put, make sure your revenue sources are recorded.

When most people think “down payment,” they picture 20% of the home price — which is enough to make almost anyone panic. But here’s the truth: you’ve got options. Lots of them.