The difference between FHA & Fannie Mae Loans

The difference between FHA & Fannie Mae Loans

The difference between a FHA and Fannie Mae loans are that the FHA insured loan is a loan by The US Federal Housing Administration mortgage insurance backed mortgage loan that is provided by a approved lender. These loans are designed for the borrowers who are unable to make a large down payment. Also, the FHA insures mortgages on single family and multi-family homes including manufactured homes. The qualifications for the FHA loan vary but in general you must have a minimum FICO score of 580 to qualify. Having a credit score below than 580 does not necessarily exclude you to having the eligibility of the FHA loan.

A FHA loan requires a down payment of 3.5 percent. It is more profitable for the lender to offer a FHA loan as opposed to a Fannie Mae loan. As for the FHA loan, it has separate loan programs. The key comparisons of the loans are that a FHA loan has a lower credit score requirement that is lower to qualify and a 3.5 percent down payment which may be less than a Fannie Mae loan. The Fannie Mae loan has a higher credit score requirement at 620 to 640 which is higher than the FHA loan.

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