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Conventional loan or FHA loan?

Author :

Submitted : 2018-06-15 01:48:56    Popularity:     

Tags: Conventional  loan  FHA  

Which would be best in the long run? I have 10k saved up but want to go back to school and have that as a safety net. My credit is is 700+. It’s cheaper to buy than rent. Any advice?

Answers:

10K is not enough for a conventional loan.

With only $10K, you may not be buying anything unless you get closing help from the seller, so you wopn't be left with $10K. A conventional mortgage will require a minimum of 10% down (you will need to shop around) and more likely 20%. FHA requires 3.5% as a down payment. There will also be closing costs involved - usually about 5 - 6% of the purchase price. If you don'
t ask for too much of a discount on the selling price, many sellers will be okay with paying 2 or 3% towards the closing costs, lowering your out of pocket (note - since you are short of cash, make sure you settle towards the end of the month - this will save closing costs).

For a $100,000 house, you are looking at about $10K out of pocket for FHA down payment and closing. Subtract out seller help of 3 points ($3,000) and you are looking at needing $7,000 out of pocket.

We have no idea where you live.
$10000 is not even going to cover closing costs in my neighborhood (or even my full state of 39Million people)
Where the least expensive house is over $150K and the average is over $400K

Let's say you live in Poduck and you can buy a house for $100,000.
If you can get an FHA loan - you are going to need about $8000 between the downpayment and closing costs.
a conventional loan isn't even an option.

What's your current income?



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