The Loan Mistake That Kills Older Home Deals

When purchasing an older home, the choice between an FHA and a conventional loan is critical. This decision affects the entire process, from appraisal to closing. Here’s a brief overview:

• FHA Loans: These government-insured loans come with strict 'Minimum Property Standards.' An FHA appraiser will require repairs for issues like peeling paint, an old roof, or outdated electrical systems before the loan can close, which can be challenging with older properties.
• Conventional Loans: Lenders have more discretion with these loans. Appraisals focus primarily on the home's market value in its 'as-is' condition. Minor repairs typically don't halt the loan process, making them more suitable for homes that need some work.
• Key Impacts of Your Choice: Your loan type influences several critical factors, including the competitiveness of your offer to sellers (conventional is often stronger), the long-term cost of mortgage insurance (FHA's can be for the life of the loan), and your options for financing renovations (both have programs like the FHA 203(k) or Fannie Mae HomeStyle®).

Read the full blog article here: https://www.iqratemortgages.com/blog/fha-vs-conventional-for-an-older-california-home