[Home Loans] Conventional Loan | FHA Loan | VA Loan (Mortgage) FHA


Hey this is Chris the Mortgage Pro. In this video we’re 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? 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! 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 you gonna be in that house? Is there PMI? Will the PMI
disappear? When will it disappear? If the PMI is gonna 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! 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 620 Fico Score 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 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 620 Fico 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 call them
something else here’s your MIP rate it doesn’t matter
if you have a 620 a 580 a 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 you 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 is 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 580 FICO score or above, here’s what’s basically going
to happen. You’re gonna probably be approved to a 56.99%
let’s call it 57%, 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 it. 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 $1200 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 payment 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 loans. 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 $101,750 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 2.15%
so on that 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
a second VA loan that’s three point three percent that is $13,200, 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 10 percent or more there is no upfront
mortgage fee that there is no VA funding fee it doesn’t exist for you. Okay
seasoning from bankruptcy many Americans through the last few
years they’ve had a hard time and they did file a bankruptcy on a conventional
loan 4 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 three hundred I owe four hundred
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 Vets win, they earned. A foreclosure well yes
some people went into 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 a conventional loan you can buy for a rental, you can 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 www.fireyourlandlord.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

17 comments on “[Home Loans] Conventional Loan | FHA Loan | VA Loan (Mortgage) FHA”

  1. 87vanidoso says:

    Great video Chris!!! Very informative. Soon we will "Fire our landlord"'!!! (LUIS J)

  2. brandon wilcox says:

    Great video

  3. Nargiz Ibrahimli says:

    Best channel that explains mortgage process step by step!

  4. Libbie Roach says:

    You’re very good at explaining things!

  5. Savage says:

    Great information! My landlord will be fired soon lol

  6. Sharky85 B says:

    This was a great video! I learned a lot. Thanks

  7. 设立了规划哦身体 says:

    Awesome information Thanks!

  8. Anthony Cooper says:

    How soon can I remove my VA loan from the property to reuse it? And is there a way I can still keep the property?

  9. personaz says:

    thanks for the information, this really helps me anticipate what I qualify for!

  10. Barry Metayer says:

    Great info: Question, I'm doing conventional loan had the option with no PMI but loan was 4.7 but added PMI loan went to 4.3 plus PMI will remove after 3-5 yrs. Was that a good move??? Thank you!

  11. Mike Halve says:

    What if I’m a veteran who uses the VA loan on say a duplex/triplex/quadplex? Could I rent out the other 1-3 units while living in one?

  12. J-Aries 251 says:

    Love your videos because you actually tell the truth

  13. Randi BooksAndMascara says:

    So thankful I ran across your channel. You break everything down so well and make it incredibly easy to understand. Thank you!

  14. Sakthi Karthika says:

    Hi chris….am ftom india….am in pre underwriting process…….ur video are very useful for my process and my knowledge…could please ellabroate about appraisal and Title….

  15. Juan says:

    great video. thank you. lots of info

  16. Dee Patterson says:

    Awesome video my question is I already have a conventional loan, but I want an FHA loan and buy an additional house with 3.5 percent without selling my first house but renting it out. Could I do that?

  17. Hector Figueroa says:

    With a Fico score of 810, a down payment of 15,000 and a salary of 50,000 a year, is it possible to be approved for a mortgage of 285,000? Conventional loan. My monthly debts come out to 315 dollars. I don't mind having a 50 percent dti.

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