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Can I switch from an FHA loan to a conventional loan

I am in the process of purchasing a house and have an FHA loan. The restrictions are so much (which I was not informed of beforehand) that we are basically having to remodel the entire house so the inspector will sign off on it. Can I switch to the conventional loan just to get it closed? I've already made the down payment months ago but I'm sure I'll have to add more to it which is not a big deal. And the home is in the family so I don't have to worry about the seller. by pdifla_242_855 from Buffalo, New York. Apr 18th 2012 Reply


Thomas J. Liolos (tliolos)
#42 ranked lender in New York - 13 contributions

It really depends on the work that the FHA appraiser called for on his inspection. If it is obvious work - items that hit the appraiser in the face - it is very possible that they could also be called for on a conventional appraisal. Depending on your income and your credit - it is always possible to switch to a Conventional mortgage - but that might not be the answer. I am a local lender in the Williamsville area and would be more than happy to discuss this further with you and let you know the options and possibilities. You can email me, confidentially, at tliolos@paragonhomeloans.com

Apr 19th 2012
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Chris Gummerson (cgummerson11)
#6 ranked lender in California - 506 contributions

Yes, request to your loan agent that you would like to change the loan program. As long as you have not signed your actual loan docs, then you can make any changes you are approved for. As long as you can make the extra down payment, then you should be ok. Also, not using FHA, you will save yourself the up front mortgage insurance and the monthly mortgage insurance. If you put 20% down conventional, then there is no mortgage insurance. If you put 10% down, you will have mortgage insurance on the conventional loan, but no upfront MI...And the MI on the conventional loans is much less...If the agent says that you cannot switch, then go to another lender. Good luck-

Apr 18th 2012
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 4,620 contributions

The short answer is yes.. you can switch from FHA to Conventional... you will have to have a new / modified appraisal, and because of the new appraisal rules (HVCC), it's possible you might have to pay for a complete 2nd appraisal. Keep in mind that conventional appraisal guidelines are much closer to FHA guidelines then they have been in the past.. Meaning, you might still have the same issues, and might still have to do repairs to get the home to pass... Conventional financing requires higher credit scores, and higher down payments, and unless you're putting 20% down, you will still have mortgage insurance... Best advice I can give you is to Contact a LOCAL mortgage broker, not the local "Big" bank, and certainly not one of those 50 states internet lenders... the LOCAL broker is familiar with local customs and works with numerous lenders, seeking out the best loan terms for your particular scenario. Because he has lower overhead, he can offer you lower rates and lower fees than most of the larger lenders.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Apr 18th 2012
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Ralph Richard Guertin (ralph@absolutelowrates.com)
#2 ranked lender in Florida - 410 contributions

yes it is more cost effective anyway, but max is 95 vs 96.5 and to go to 95% you need a 740 score

Apr 18th 2012
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Larry Gray (lgray_312_247)
#8 ranked lender in California - 284 contributions

I wonder if that worked out ok? A high balance loan might be more difficult as many PMI companies require at least 85% ltv, as lameas it may sound! I try to find every avenue I can for borrowers, and can often provide what they want as direct lenders. I do broker sometimeswhen that is the avenue to meet my borrower's needs.

Oct 26th 2012
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Larry Gray (lgray_312_247)
#8 ranked lender in California - 284 contributions

I hope that worked out! I would add that on a high balance loan many PMI companies only allow up to 85% ltv on a refinance beforethey will provide mortgage insurance! I know that seems unreasonable since they do purchase loans to 90% ltv. I suspect it is becausethey think the person is not immediately risking their own money. However, on a $550000 loan they may have originally put up3.5% for an FHA loan and perhaps need to come in with much more to reach 90% loan to value.They their ideas about risk no matter how good your credit, debt to income ratio, and assets!

Oct 26th 2012
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Larry Gray (lgray_312_247)
#8 ranked lender in California - 284 contributions

I saw this after a usual PMI company was not allowing for 90% loan to value PMI. Doingmainly FHA with low money down, and almost all my conventional loans with 20% down or more,I jumped the gun after I ran my pricing engine on a high balance conventional loan to 90%! Ihad to change it to 89.9% because it will not accept exactly 90%. I learn something new sometimes! I can say that in CA one can also forgo having tax & insurance impounds at 80.1% to 89.9% ltv!

Nov 9th 2012
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