What is the difference between a conventional loan and a FHA loan?

We are getting our finances together to purchase a home, but are probably going to go with an FHA loan. Several of the houses we have looked at are saying " Financing , conventional." Does this indicate that this house would not be available to us for purchase with an FHA loan? When you purchase an house through an FHA Loan, do you have to go with houses on a preapproved list? I know the inspection for FHA loan purchases are more rigorous, is there anything else I need to know or am not understanding?

Please forgive my grammar and spelling, I have two children on my lap.

Molly, I think the website below will help explain FHA inspections. At one time they were much more rigerous. HUD, the government agency controlling FHA activities also recommends hiring a private home inspector.

I would agree, just because the agent did not enter FHA, does not mean that is not available for that home. There will be a maximum limit in your area. If the home is priced above that limit, then FHA may not be available.

Your Buyers Agent would be able to provide more accurate information for your specific area.

The main advantage of a fha vs conventional loan is that the credit qualifying criteria for a borrower are not as strict as conventional loan financing and the down payment or Equity requirements are less. In comparing a purchase money FHA loan against a Conforming or A paper loan, the FHA loan will generally have the least amount of money required to close and the lower payment.

FHA funding is backed by the government. sometimes sellers do not like government backed loans due to the guidelines required by the funder. Conventional loans are more lenient....ie power lines in back yard ok, no stove, etc......

i would question why a seller would not allow a FHA loan, it may save you in the long run.... homes not qualifying for government backed loans are harder to sell in the future....

good luck

On a FHA loan the subject prop must meet certain guide lines, no fixers. FHA loan is insured and backed by HUD. It is easier to get a FHA loan if you only have fair credit.

An FHA loan is an insured loan, insured by the Federal Government. A conventional loan is investor funded.

The property must meet minimum requirements to be eligible for FHA financing. Most do. Just because the listing agent didn't put it in the listing, doesn't mean you can't use FHA. But , I would ask before you fall in love. No there is no pre approved list. The home just has to meet minimum standards, in other words it must be habitable. The inspection isn't that rigorous as in the past. Now keep in mind that the inspection you are talking about is done to provide the lender with value, not habitability. If you purchase a home that is existing, I can not stress strongly enough how important it is for you the buyer to purchase a whole house inspection.
This is vital. Write any offer "contingent upon an inspection". That way should the property have issues that could cost you a great deal of money to repair, you can renegotiate the contract or walk away.