Fannie Mae Vs FHA – What is best for you? Two of the most common types of loans are what we call FHA (Federal Housing Association) and Fannie Mae loans. FHA is the Federal Housing Administration, hence the abbreviation. FHA loans are designed for the low for borrowers who are unable to make a large down payment. With, FHA loans may cause mortgage insurance to be more expensive and includes extra fees. To apply for an FHA loan, you generally can have a lower credit score than Fannie Mae.
Fannie Mae is a government-sponsored enterprise that buys loans from mortgage lenders. The term “Fannie Mae” is a nickname that it got from its abbreviation, FNMA, which stands for Federal National Mortgage Association. Fannie Mae can also be referred to as a conventional loan. The purpose of a Fannie Mae loan is to create a secondary market for purchases and sales of mortgages.
There are many different rules and requirements for both types of loans. Sometimes your loan officer will suggest one over the other because one may have a guideline that applies to your situation easier.
The most important thing is to ask questions and make sure you understand the pros and cons of them both.
