THDA Loans: What is the difference between conventional or FHA? (insurance, loan)

[anashvillian]

I am young and have a credit score over 740. Also I am a first-time homebuyer.

I looked at several lenders such as AbsoluteMortgageCo who offered rates <5% but only over 100k. Same with Golden Rule. A local bank in Franklin offered me 5.3% on a loan <100k.

With this - why not just get one of the THDA programs that offer an interest rate of 5%?

The question I have is this:

What is the difference between conventional and FHA? Are there benefits to both? I would probably end up paying <20% down... so would FHA be better? If I could pay 20% would conventional offer cheaper closing costs?

Please help! Thank you

[VictorBurek]

The main difference is FHA is backed by FHA insurance. If you can put down 20% go conventional. Rates are better and closing costs are less. Even if you cant go 20% try doing a split mortgage. For example, lets say you can do 10% down, do a 80/10/10 loan. That is a 80% first mortgage, 10% second mortgage and a 10% down payment. Structuring the loan that way will give you the best overall deal and less costs. FHA charges an upfront fee of 1.75% and conventional doesnt.