Conventional versus Government Loans
Tristan and his WHITEBOARD – LIVE!
Conventional Versus Government Mortgage Loans
Hi everybody. This is Tristan Emond with Mindful Living Realty. Welcome back to Tristan and his WHITEBOARD – LIVE!
Today I’m with Angelia Dale with Gateway Mortgage.
And today we’re going to talk about the difference between conventional and government loans.
So first of all, Angelia, give us a quick synopsis of what each one is. Okay so your conventional loans – they require a down payment. You know, anywhere between 5% and however much you want to put down. They’re more your traditional loans that we do.
Our government loans are FHA VA and Rural Development. Some of them require 0% down up to 3 1/2% down for the FHA loans.
Okay so biggest difference at this point is down payment. So Conventional is 5% I’m sure plus, right? Government is zero to three and a half.
Okay so that’s the main, obviously, money thing. So, if you have don’t have as much money down, you’re going to be with an FHA, VA or RD type of loan. If you’ve got a bigger percentage down, conventional is probably the way to go. Yes.
So, what’s next on these?
Rules and Regs
Conventional loans have less rules regarding the appraisals, what you can do with the house, things like that. Where the government loans some of those loans require – you can’t rent out your house, you have some different mortgage insurance requirements, that kind of thing.
Okay so conventional – less rules. Government – more rules.
But that’s because I assume that the government is financing it, so they’re going to say “Hey if we’re gonna give you the money, you’re going to follow our guidelines” correct? Yeah you are getting into a program that has zero to three and a half percent down, so there are some regulations required like that.
Very good. Okay next up?
Income and Assets
Our next step on conventional – they are not as particular on income, on assets, that stuff. Your government programs – most of them have income requirements or asset requirements. So, they’re a little bit tighter on the government programs regarding what they’re looking for.
Okay so loose-er income regs (right?) on conventional. And government has more income regs over here. ‘Cause, again, you’re basically buying into a program that allows you to have a lower percent down, right? Therefore, they’re going to have more rules.
Okay last step. What about – I know with some of these government loans…you go into the property and there’s the peeling paint outside or you’ve got a cracked window that has an issue.
The government programs are a lot tighter regarding health and safety issues. So, when you have peeling paint, broken screens or broken windows, things like that, that becomes an issue. The government programs want to make sure that you don’t have a lot to fix when you go into a home, because you’re going in with zero or three and a half percent down. So, you don’t have a lot of assets to fix that property. They are a bit tighter on their appraisal requirements.
Where a conventional – they don’t care so much if there’s peeling paint on the house, because you don’t have to go in and fix that.
Right – so we’ve got less conditions on the home (conventional) and then we’ve got more conditions over here (government).
All right, well if that kind of wraps it up for us.
Thanks so much for coming on today and hopefully you can see or got some information here. I’ll see you next time on Tristan and his WHITEBOARD!
Angelia Dale’s Legal information:
Angelia Dale, Loan Originator, NMLS #175544
Gateway Mortgage Group
Rapid City, SD
Gateway Mortgage Group is a registered service mark of Gateway Mortgage Group, LLC NMLS 7233. All loans subject to program guidelines and final underwriting approval. Contact local branch for details. 1301 W Omaha St #118, Rapid City, SD 57701. South Dakota Mortgage Lender License #ML.05071.