FHA Loan vs Conventional Loan in Kansas

FHA Loan vs Conventional Loan in Kansas

When comparing an FHA loan vs conventional loan in Kansas, it helps to know how each one works. FHA loans are insured by the Federal Housing Administrationand are designed to help more people qualify for a mortgage. Conventional loans are not backed by the government and usually come with stricter credit and income standards.

Both types of loans are widely used by Kansas buyers. Which one is right for you will depend on your credit score, how much you can put down, and how long you plan to stay in the home.

What to Know About Down Payments

One of the most noticeable differences between an FHA loan vs conventional loan in Kansas is the required down payment. FHA loans allow you to buy a home with as little as 3.5 percent down, even if your credit score is on the lower side.

Conventional loans typically require at least 5 percent down, and that amount may increase depending on your credit and the loan program. Buyers with higher scores may qualify for programs with just 3 percent down, but you’ll need to meet additional guidelines.

If you’re saving up for your first home, a Kansas FHA mortgagecould make it easier to get started sooner.

How Credit Scores Affect Loan Approval

FHA loans are known for being more flexible with credit scores. Most lenders will approve an FHA loan with a score as low as 580. Some may even go lower with a larger down payment.

Conventional loans usually require at least a 620 credit score, and higher scores often qualify for better rates and lower fees. If your credit is strong, a conventional loan could save you money over time.

For Kansas buyers with lower credit or limited credit history, an FHA loan may be a better fit in the short term.

Mortgage Insurance Differences

FHA loans always include mortgage insurance, which helps protect the lender in case of default. This includes both an upfront fee and a monthly payment. That insurance stays on the loan for the life of the loan unless you refinance.

Conventional loans also require mortgage insurance if you put less than 20 percent down. But you can cancel this insurance once your loan reaches 80 percent of the home’s value. This flexibility can make conventional loans more affordable over the long term for buyers who build equity quickly.

Flexibility in Refinance Options

If you already own a home and want to change your loan terms, both FHA and conventional loans offer refinance paths. FHA homeowners can use the FHA Streamline program for a quicker refinance process. Conventional loan holders may be able to refinance to lower their rate or switch terms.

Wondering “When can I refinance my FHA loan?” In most cases, you must wait at least 210 days from your closing date and have six on-time monthly payments. After that, refinancing might help you remove mortgage insurance or lock in a lower rate.

Which Loan Is Better for Kansas Homebuyers

There is no one-size-fits-all answer when comparing an FHA loan vs conventional loan in Kansas. Here are a few questions to help guide your choice:

• Is your credit score above 620? You may qualify for a conventional loan with better terms
• Do you have limited savings for a down payment? An FHA loan may help you buy sooner
• Do you plan to keep the home long-term? A conventional loan might save more over time
• Are you a first-time buyer? FHA programs are designed to make it easier to qualify

Every situation is unique. The best way to decide is to talk to a local mortgage expert who can walk you through your numbers.

Ready to Choose Between FHA and Conventional? Let Molly Dean Team Help

If you’re comparing an FHA loan vs conventional loan in Kansas, reach out to the Molly Dean Team. We’ll help you understand your options and choose the best loan for your needs. Let’s find the right path to homeownership together.