One difference between an FHA loan and a typical conventional loan is that the FHA loan:
A. probably has a higher loan-to-value ratio
B. requires a larger down payment
C. is issued by the government instead of a commercial lender
D. probably has a shorter loan term
A. probably has a higher loan-to-value ratio
Explanation: The required downpayment for an FHA loan is smaller, not larger, than the downpayment required for a typical conventional loan. An FHA loan often has a loan-to-value ratio over 95%; the maximum FHA LTV is 96.5% of the appraised value or sales price. In contrast, LTVs over 95% are not typical for conventional loans. FHA loans are insured by the government, but they are issued by commercial lenders just like conventional loans. There's no difference between FHA loans and conventional loans in regard to repayment periods.
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