Q: Can you explain the difference between a conventional mortgage and an FHA Mortgage?

A: A Federal Housing Authority (FHA) or Veteran’s Administration (VA) loan is backed by the federal government. If you default on the mortgage, the government will step in and pay off your loan so the lender doesn’t get hurt. Also, government-backed loans offer higher debt-to-income ratios, which means you might be able to borrow more than with a conventional lender.

A conventional loan means you get a loan through regular mortgage channels. You will typically have to stick to conventional lending ratios, which means you’ll be allowed to spend up to 28 percent of your gross monthly income on your mortgage and up to 36 percent on your total debt (including school, auto, and personal loans plus credit card debt, if any).

The biggest difference between conventional loans and government-backed loans is that FHA and VA loans are typically a bit more cumbersome for lenders to process and more expensive for consumers.

Aug. 21, 2003.