 TITLE: What Is an FHA Loan? CONTENT: How an FHA Loan Is Different From a Conventional Loan\n-----------------------------------------------------\nWhile FHA loans and conventional loans are both mortgages that allow you to borrow money to purchase a home, there are a few key differences:\n*   **Down payment requirements**: While you can get some conventional loans with as little as 3% down, most require 5% down, and borrowers often put down more than that. With an FHA loan, you can get a mortgage by putting down only 3.5%.\n*   **Insurance requirements**: A conventional mortgage only requires you to pay mortgage insurance if you put down less than 20%. And if you do put down less, the mortgage can be cancelled once you have 20% equity in the house. An FHA loan, on the other hand, requires you to pay mortgage insurance for the life of the loan (unless you put down 10%, and then you can stop paying it after 11 years).\n*   **Borrowing criteria**: Conventional loans have more stringent credit score requirements; FHA loans allow for borrowers to have lower credit scores.\n*   **Interest rates**: An FHA APR is usually 1.5 to 2 points higher than conventional fixed-rate mortgages for borrowers with good to excellent credit. But FHA interest rates are lower than introductory rates on conventional subprime mortgages, especially adjustable-rate mortgages that have a big rate increase after several years.\n*   **Closing costs**: With a conventional loan, you have to pay for all closing costs in full at closing. An FHA loan lets you finance some closing costs and spread them out over time as part of your mortgage payment. END