"My brother is too kind. He was eminent when my eminence was only imminent." -Niles Crane
Question #91651 posted on 09/25/2018 10 p.m.
Q:

Dear 100 Hour Board (especially Sunday Night Banter),

What is the difference between FHA, USDA, and traditional loans when buying a house? I kind of understand the positives of the USDA and FHA loans, but nothing I've seen has listed any kind of negative aspects to them, is there any reason that a qualifying person wouldn't want to use one of these programs?

-My Name Here

A:

Dear MNH,

This is a fantastic question! In order to give you a side-by-side comparison I created the following chart:

Different Loan Types
FHA VA Conventional USDA
+ Lower credit scores are accepted + No strict limits for credit eligibility or debt-to-income ratio + Usually offers best interest rate + No down payment required
+ Requires a smaller down payment compared to conventional loans - Have to be cleared by the VA + Usually no Private Mortgage Insurance - Limited to certain geographical areas
- Usually requires you to pay Private Mortgage Insurance (PMI) - Can usually get better rate with conventional loan - Requires higher down payment - Borrower can't have income 115% above median income for area
- Usually requires you to pay higher closing costs - Usually requires a VA funding fee     - Home has to meet USDA standards
- Home needs to meet FHA standard of living         - Usually requires Private Mortgage Insurance

To be honest, each person will need to choose a loan type based off of their individual situation. I would recommend discussing your options with an Equal Housing lender because they will be able to give you specific direction based off your financial circumstance.

If you need a recommendation for a lender to talk to, I'd be happy to offer some options. Just shoot me an email and we'll talk.

-Sunday Night Banter