What are Conventional Loans?
Conventional Loans are mortgage loans that are not insured by the government (like FHA, VA, USDA Loans), but they typically meet the lending guidelines that have been set by Fannie Mae or Freddie Mac. Typically, conventional loans have better rates, terms and/or lower fees than other types of loans. However, conventional loans typically require a borrower to have good-to-excellent credit, reasonable amounts of monthly debt obligations, a down payment of typically 5-20% and reliable monthly income. Conventional loans are ideal for borrowers with excellent credit. Depending on the area median income (AMI) where a borrower would like to purcahse, as a first time homeowner there may be guidence where they may put down as little as 3.0%! Contact us to see how you qualify.
Most Common Types of Conventional Loans
Fixed Rate Mortgages: Fully Amortizing where the Interest Rate Over the Term of the loan create a Principal & Interest Payment that does not chage.
30 Year Fixed Loan
Benefits: Lowest fixed monthly payments
20 Year Fixed Loan
Benefits: Low fixed monthly payments
15 Year Fixed Loan
Benefits: Lower rate than the 30 or 20 Year Fixed Loans; Pay less interest and pay your home off more quickly.
10 Year Fixed Loan
Benefits: Lower rate; Pay off your loan and build equity faster.
5 Year Fixed Loan
Benefits: Lowest rate; Pay off your loan and build equity the fastest
Adjustable Rate Mortgages (ARM): After the initial period your interest rate can change. In these examples, the rate will change once a year after the initial period.
Fixed Rate for 3 Years, Adjustable Rate for the remaining 27 years
Fixed Rate for 5 Years, Adjustable Rate for the remaining 25 years
Fixed Rate for 7 Years, Adjustable Rate for the remaining 23 years
What are the Conventional Down Payment Requirements?
For Purchase transactions Conventional Loans typically require the home-buyer to put down at least 5% of the purchase price of the home. Depending on the area median income (AMI) where a borrower would like to purcahse, as a first time homeowner there may be guidence where they may put down as little as 3.0%! Contact us to see how you qualify.
What types of property are eligible?
Most conventional loan programs allow you to purchase single-family homes, warrantable condos, planned unit developments, and 1-4 family residences. A conventional loan can also be used to finance a primary residence, second home and investment property.
Find Out if a Conventional Loan is Right for You
Pick a time to go over a mortgage plan with our Team & we'll find what's best for you!