Conventional vs. FHA vs. VA Loan – Compare [Home Loans] Mortgage


hey this is Chris the mortgage pro in
this video with comparing conventional loans to FHA loans to VA loans which
one’s the best one which one’s right for you you know so many consumers are curious
which loan is best for me we really don’t know the average consumer doesn’t
know cuz there’s so many variables but today I want to help you figure out
which one is gonna benefit you and your family the most for you a short-term
and/or long-term goals because it’s different for everybody now there are
advantages to each one of these loans so some have lower interest rates some have
lower fees there’s all kinds of different things to think about so
really you need an experienced and licensed loan officer to help you
evaluate this in many cases this is gonna be really clear it’s gonna be so
obvious and in some cases you know it’s not going to be so clear gonna have to
ask you a couple of questions you’re gonna have to be thinking about a few
different things what’s my future look like how long is a big and important
factor on how long am I gonna keep this house now most people have a tendency to
just look at one thing the payment which is cheaper well it’s understandable when
you’re buying a house you say hey which which payment is cheaper but again how
long are you gonna be in that house is there PMI will the PMI disappear when
will it disappear if the PMI is going to disappear in five years but I’m gonna be
here in 20 years maybe this other loan is better a long term so we have to look
at these things as a whole now people ask you all the time what’s today’s
interest rate it’s impossible to answer that question because your finances and
every person’s finances are as different as fingerprints you may have an 800 FICO
score your next-door neighbor who wants to use the same type alone may have a
600 FICO score obviously the interest rates gonna be different you may have
$50,000 saved I know some of you saying yeah I’m fighting $50,000 well you may
have $50,000 and your next-door neighbor may have $10,000 very different
situations you may be a commissioned person he may be a salaried person
somebody else might be an hourly plus overtime
person all of these things are different is this a rental is this a second home
or you’re gonna live in the house these things all affect the interest rate and
all affect what programs we need to go with remember everybody’s situation is
as different as a fingerprint when we look at the whole situation you have to
understand that all these items represent different risks to the lender
and the higher the risk the higher the interest rate the lower the risk for
example if you put a lot more money down obviously a lower risk right or if you
have a higher FICO score lower risk right well we have to look at these
things as a whole to help you determine what interest rate you’re gonna get and
that also helps determine which program is right for you okay now it’s time
we’re gonna get into the nitty-gritty we’re gonna get into the comparison
number one conventional loan a conventional loan has a minimum of a 625
Coase for credit score if you’re not sure what a FICO score is that is your
mortgage credit score now on an FHA loan some lenders go as low as a 500 my
company goes down to a 550 the truth is nobody gets approved at 500 anyway and
on a VA loan we’re also looking at the same thing many lenders go to 500 our
company goes to 550 okay PMI mortgage insurance and on FHA it’s
called MIP mortgage insurance premium now on a conventional loan what happens
is it is very very dependent on what is your credit score somebody with a very
high credit score might have a very low mortgage insurance payment but if you
have a 625 go score your mortgage insurance payment could be way high now
on FHA FHA has pretty much standardized here is your MIP rate remember they’re
the same thing they just called them something else
here’s your MIP rate it doesn’t matter if you have a 620 a five eighty of 550
or 800 FICO score makes no difference you’re gonna pay the same rate on a VA
loan great news no PMI no MIP got that one okay we’re almost halfway
through the video so hit the subscribe button and hit the like button I
appreciate that now if you’d like to comment I will
answer every single question personally and of course you’re welcome to share
this with anybody you think it’s valuable for okay debt ratio a debt
ratio is the percentage of your gross gross income as before they take taxes
out a percentage of your gross income to your debt now on a conventional loan
with a high FICO score they’re gonna allow you or a 50% that includes your
car payment your credit cards student loans alimony child support all those
kind of things plus the new house payment that should be no more than 50%
now if you have a lower FICO score it’s probably gonna be 45% that’s how
conventional works now let’s take a look at FHA with a 585 go score or above
here’s what’s basically gonna happen you’re gonna probably be approved to a
fifty six point nine nine let’s call it fifty seven percent again that includes
all your debts plus the house payment as a payment lastly we have a VA loan now a
VA loan works very very different it looks at how much money is left over
after paying all this stuff and it’s called residual income and everybody
depending on what area of the country you live in and how many people in your
family there’s a certain formula for now if you have 20% more than that just to
give you an example if it was a thousand dollars but you have 20% more $1,200 and
a high FICO score you may even go up to 60 or 65% debt ratio which is
unbelievable and its highest in the whole industry interest rate on a
conventional loan you’re often going to hear Fannie Mae Freddie Mac those are
conventional loans on a conventional loan you are gonna have a higher
interest rate than either FHA or VA on an FHA loan it’s lower than conventional
and right about the same as VA they have virtually the same interest rates down
pay on a conventional loan you’re usually
looking at a 3% down payment people ask me about a conventional loan
Fannie Mae Freddie Mac yes those are conventional laws now if we look at an
FHA loan an FHA loan is gonna require a three and a half percent down payment as
long as your FICO score is 580 or above if it’s 579 or below it requires a 10%
down payment and of course for our veterans who honorably served we thank
you you get a zero percent down payment loan okay so we talked about PMI MIP
mortgage insurance whatever you want to call it but there’s also something
called upfront mortgage insurance now on a conventional loan there is no upfront
mortgage insurance but those of you with a high FICO score might want to pay some
and they eliminate the monthly PMI payments forever so that’s a big deal
and that’s only available on a conventional loan and it doesn’t make
sense unless you have a really good FICO score on an FHA loan we take the loan
amount and multiply it by 1.75 percent we have to add that to the loan amount
simple example if you have a hundred thousand dollar loan 1.75 percent is
$1,750 we’re gonna add that so you’d actually be borrowing a hundred one
thousand seven hundred and fifty dollars upfront mortgage insurance on a VA loan
there’s a couple of different scenarios here the first time use of a VA loan
it’s two point one five percent so on the same hundred thousand dollars it’s
two thousand one hundred and fifty dollars added on on a second time use
it’s three point three percent so that’s three thousand three hundred dollars now
it doesn’t sound like the end of the world but if you’re taking a four
hundred thousand dollar loan and it’s this second va loan that’s three point
three percent that is thirteen thousand two hundred dollars that may make you
say mmm this other loan might be better now though lastly if you’re a veteran
who happens to be disabled ten percent or more there is no upfront
mortgage fee that there is no VA funding fee it doesn’t exist for you okay
seasoning for a bankruptcy many Americans through the last few years
they’ve had a hard time and they did file a bankruptcy on a conventional loan
four years must have elapsed from the discharge not from when you started but
from when it was finished before you’re allowed to apply for a conventional loan
on an FHA loan it’s only two years and on a VA loan it’s only two years short
sale seasoning well a lot of people ask what’s a short sale well at a time when
people owed more than the house was worth they often went to the bank and
said hey my house is worth 300 I owe 400 and the bank accepted three hundred
thousand dollars that was called a short sale well if you have a conventional
loan if you want to apply for a conventional loan it would be four years
after a short sale for an FHA loan it’s three years must have elapsed from the
time of the short sale and for a VA loan it’s only two years again that’s when
they earned it a foreclosure well yeah some people when it’s a really hard
times on a conventional loan we are looking at seven years before you can
buy a home again on an FHA loan it’s only three years and for the vets two
years from a foreclosure okay time back to work after an extended absence well
on a conventional loan there is actually no real time frame but the lender will
take a look they just want to make sure it’s reasonable and everything is
considered as a make sense situation you can be back to work for one month after
or six months or a year off on an FHA loan FHA guidelines require six months
back to work with pay stubs proof they’ve been back to work for six months
before they’ll accept that income on a VA loan it varies per lender some
lenders will accept right back to work some might want six months or three
months a lot of them will require just get past the probationary period on the
job and you’re good to go occupancy on
conventional loan you can buy for a rental you could buy for a second home
if maybe you want to live in the mountains or down by the beach on the
weekends or obviously for an owner-occupied property for a FHA and VA
loan it is owner occupied only hopefully this video will help you need a decision
making process which loan is right for you but if you still stuck reach out to
me call me text me email me and if you want this information for free go to
fire your landlord that info click on the tips page we have a download button
right for you and of course I want to help you fire your landlord

15 comments on “Conventional vs. FHA vs. VA Loan – Compare [Home Loans] Mortgage”

  1. Fire Your Landlord says:

    For a Free PDF download to be able to compare just visit www.FireYourLandlord.info and visit the Tips page!

  2. Realtor Madison Jones says:

    Great Info for buyers!

  3. Inland Empire Homes says:

    Thank you for taking the time to educate the consumers

  4. Broker Realtor in IE Homes For Sale and Real Estate says:

    Great information to Buyer’s!

  5. Bessie W says:

    Hey Chris! Do you do out of state loans , i.e. Florida?

  6. Bronx Bomber says:

    I wanna buy ten of your houses 😂

  7. Armand Mcmillian says:

    So if I want to get a 100k loan from a credit union and rent out the house and 3-5 years get settlment fee and pay off the rest. it'll be better to get which loan.? Conventional.?

  8. jay thomas says:

    Very helpful, Thank you…… 👍🏽

  9. Chinosba Sba says:

    Thank you for the info..
    I read the Citibank doesn't charge PMi do you believe is true or they will be charging me for something else in the mortgage after?

  10. Fabiola Merritt says:

    Excellent video! My husband is a veteran from the Army now and he wanted to use the VA to refinance our house but VA loans are very detailed in what they want in a house. I don’t know if is now a good time to sell and buy another house using the VA. We are now 48 years old and better finish to pay $60,000 and no get another debt of $200,000.

  11. 10thOfJuneBug says:

    Awesome video…well put info. You answered a ton of questions I had in this one video. Thanks!!

  12. Kyle Camacho says:

    can you make a video on how to refinance process works?

  13. Lord Alfred Dela Cruz says:

    Great, concise information. Thank you!

  14. esteban vidales says:

    Thank you sir. Awesome video!

  15. Chris Adams says:

    I want to use my VA loan but I got turned down from a lender 12 hours before closing. They looked at my credit again a day before closing.

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