At Mortgage Trees, one of the central pillars of our business is the belief that knowledge is power. Our primary goal is to arm our clients with the information they need to make a well-informed decision for their mortgage. There are many options available for Utah residents including conventional mortgages as well as government-s
ponsored loans such as FHA. For advice on what options are best for your situation, please give us a call.

What is a conventional mortgage?

A conventional mortgage conforms to the underwriting guidelines Frannie Mae and Freddie Mac. Frannie Mae & Freddie Mac are the U.S. government-sponsored enterprises that purchase mortgages from originating lenders. Lenders will service some of the mortgages they originate even though they are typically “securitized,” sold as securities that Fannie Mae and Freddie Mac can guarantee.  Conventional mortgages are not guaranteed or insured by the federal government. 

The underwriting guidelines for conventional mortgages can be at times more strict than for government-sponsored loans, but often times they will have lower interest rates and lower closing costs.  Borrowers must have good credit to qualify, and those borrowers with the finest credit can receive the best interest rates.  FHA makes allowances for borrowers with limited credit history but conforming loan guidelines do not typically allow for such concessions.

Borrowers must have their own money for a down payment or equity in the home for a refinance transaction in a conventional mortgage.  A minimum down payment of 5% and up to 20% is needed depending upon the location and type of property. Conventional loans are typically best for those who are financing below 80% of the home’s value. Conventional loans will have a fixed or adjustable interest rate with a term of 15 or 30 years.  Other loan terms available such as 10, 20 or 25-year mortgages. A mortgage with a shorter term will often have a lower interest rate, and borrowers can build equity more quickly. 

What is an FHA mortgage?

FHA, or Federal Housing Administration, is the agency that is part of the U.S. Department of Housing and Urban Development. An FHA loan is a great option if you are purchasing or refinancing a home and have limited funds or equity to use as a down payment. The FHA loan program was created to help borrowers and lenders by providing mortgage insurance that will protect the lender in case the borrower defaults on the mortgage. At the closing of an FHA loan, a MIP (mortgage insurance premium) is charged to the borrower and paid to the FHA, this gives the borrower the benefit of reduced interest rates and down payments.

An FHA mortgage can benefit borrowers of all income levels. The benefits include an allowance for reduced credit scores, reduction in closing costs, and the ability to qualify at slightly higher debt to income ratios. The lenders of FHA loans are encouraged to approve borrowers and properties that would not qualify for a conventional mortgage because mortgage insurance is in place to help keep them protected in case of losses. 

The only way to obtain an FHA loan is working with a mortgage loan company that has been approved to originate FHA loans by the U.S. Department of Housing and Urban Development. Mortgage Trees has the approval and is fully licensed to originate FHA loans. After you apply for an FHA loan, we will analyze your debts, income, and credit to determine the loan amount that the borrowers can qualify for. The FHA does have loan limits based upon the address of the property, and those with limited credit history may still be eligible for an FHA loan.

Contact Us

Call (888) 546-3243 to get started!

First Time Homebuyers:

If you are a first-time homebuyer an FHA loan can reduce your down payment. The borrower only needs 3.5% for their down payment and can receive up to 6% of the purchase price from the seller or family members to use towards closing costs. An FHA loan also allows a blood relative to cosign for a loan should the borrower have bad or credit at all.

Trillion Mortgage can answer all FHA related questions for your new home purchase or your refinance. We specialize in Utah mortgages. FHA loans can offer the borrower more flexible options that a conventional mortgage can. If you are a first-time homebuyer or have moderate income, then an FHA loan with Trillion Mortgages is right for you. Call us today at (801) 261-2617, and we will help you with your next, or first, Utah mortgage loan.