Home Loans In Kansas City, Kansas 

Straddling the border with Missouri, Kansas City is the third-largest in Kansas. This beautiful city offers something for everyone from art and history to food and shopping. Little wonder the housing market here is still hot despite all the complications from the pandemic. 

That’s why if you’ve been thinking of owning a home in Kansas City, now is still an excellent time to explore your options. But before you do, it’s essential to work out how you intend to finance the purchase. 

While many types of home loan programs are available in Kansas City, the two most common options are Conventional and FHA mortgages. Let’s go over the differences between these two home loan programs, so you’ll know which one suits your situation. 

Conventional vs. FHA Loans

Conventional home loans are simply loans that have no government backing. This means they are offered by lenders but without the guarantee from the government that the borrower will repay them. This makes the eligibility requirements a bit more stringent since lenders have to assume some of the risks associated with default. 

On the other hand, FHA loans have backing from the government through the Federal Housing Administration. Because of this backing, lenders feel more confident when extending financing to borrowers because they know the government insures the loan against future default. 

The primary differences between these two popular loan options include: 

• Down Payment

The lowest down payment possible for conventional mortgages is 3%. The lowest down payment possible for FHA loans is 3.5% if your credit score is at least 580, but 10% if 500 to 579. 

If you have extra funds, it’s best to maximize your down payment to reduce your monthly mortgage payments.

• Mortgage Insurance

If the down payment is below 20%, conventional mortgages will require PMI or Private Mortgage Insurance. Conventional mortgages’ PMI will cancel once your balance reaches 78% of the original purchase price. 

FHA loans always carry mortgage insurance premiums or MIP. The MIP is for the life of the loan and can only be canceled if you either ultimately pay off the loan or refinance an FHA loan to a conventional loan.

For FHA loans, there are two types: upfront mortgage insurance (UFMIP) and mortgage insurance premium (MIP). UFMIP is 1.75% of the loan amount and is financed into the mortgage, while MIP ranges from 0.45% to 1.05% as annual premiums.

• Credit Score

The minimum credit score for conventional mortgages is 620, while 500 for FHA loans.

• DTI Ratio

Conventional lenders prefer a debt-to-income (DTI) ratio of 45% or less. However, the limit varies across lenders. FHA loans, on the other hand, FHA loans can go as high as 50%. It may even go as high as 57% with compensating factors.

• Loan Limits

The Federal Government revises loan limits for conventional and FHA loans every year. Conforming loan limits (applicable to conventional mortgages) for 2022 is around $647,000 for one-unit properties and about $970,000 for high-cost areas. 

For FHA loans, the 2022 nationwide loan limit for a one-unit property is set at $420,680.

Kansas City, Kansas Mortgage Lender

At Capital Home Mortgage Kansas City, we offer both conventional and FHA loans, in addition to several other home loan programs, including VA, USDA, and Jumbo loans. What’s more, these loan programs are available at competitive interest rates and lower processing fees. 

Capital Home Mortgage is a direct mortgage lender, meaning we’ll handle your application from start to finish and even finance your mortgage from our coffers. This way, you don’t have to deal with multiple third parties to pursue a suitable home loan in Kansas City. 

Get A Home Loan In Kansas City

We know too well how lengthy and complex the home loan process can be, especially if this is your first time. That’s why we’re committed to simplifying home loan applications and providing flexible underwriting to fast-track the process through to closing. 

Talk to our loan officers in Kansas City today to find the right home loan for you. Simply call us at (316) 261-5400 to get started with a no-obligation quote.