Yolanda Stewart from F&M Bank is back to discuss the best type of financing for you.

Last time, we focused on VA loans. This time, we want to talk to you about two other common loans: conventional loans and FHA loans.

The great thing about the VA loan is that you don’t have to pay a down payment if you stay under that $453,000 loan limit. If you don’t have VA eligibility, another way to get a house without putting a lot of money down is the FHA loan.

The minimum down payment for FHA is 3.5%, which is very nice. If you’re a first-time homebuyer, there are several options for down payment assistance programs. There are programs offered through the city of Clarkesville and other programs through the state of Tennessee.

The old FHA limit was $274,000. The new FHA limit is $294,515. That is a big deal. It used to be that if you bought a home over the $274,000 limit, you would have to pay extra money. Now, that limit has increased to $294,515.

They come up with these future loan limits based on the metropolitan statistical area and county. They’ve seen that the prices of houses are increasing, so the corresponding reaction is to look at the floor limits of what they are allowing for buyers.

“The FHA loan limit went up in order to let more homebuyers into the market.”

Since prices are up nationwide, they wanted to raise the loan limit and open up a gate so that more homebuyers could qualify. It’s a great time to get into the market and buy a house. There is still a lot of inventory, and we can help you find homes that are off the market as well.

If you have more money saved up, you can go with a conventional loan instead. The floor for a conventional loan used to be $417,000 and is now at $453,100 for conventional.

If you are eligible for a VA loan, Yolanda recommends going with the VA loan. If you are choosing between a conventional loan or an FHA loan, what should you do?

In Yolanda’s professional opinion, a conventional loan is better than the FHA loan. The conventional loan does give you the option to reduce your mortgage insurance by the amount you put down, and you only have to pay monthly insurance. The FHA loan does not give you that option unless you put 11% down, and the mortgage insurance lasts for the lifetime of the loan. In addition to paying monthly insurance, you also have to pay for the insurance up front.

If you have any other financing questions for Yolanda, you can reach her at 931-809-0115 or yolanda.stewart@myfmbank.com. As always, if you have any real estate questions for me, just give me a call or send me an email. I would be happy to help you!