What is a Conventional Loan?
Conventional loans can also provide low down payment options for first time home buyers as low as 3%. These loans are best suited for clients with established credit history resulting in higher credit profiles meanwhile slightly more strict debt to income ratio requirements than government backed loans.
How Can I Benefit From Applying For A Conventional Loan?
Conventional loans are seen as riskier because there is no one to guarantee them, but they can be more manageable for people to take on because insurance premiums can be lower than their government counterparts.
Additionally, requirements for a down payment can vary based on a person’s credit score and the concerns by the lender. Borrowers who take on a conventional loan are usually responsible for a number of other fees, including origination and appraisal fees. Most people also take on mortgage insurance, which means these types of conventional loans may come with a high out-of-pocket cost.
Tips for Taking out a Conventional Loan
Conventional loans fall into two categories: conforming and nonconforming. Conforming loans follow the Freddie Mac and Fannie Mac guidelines. The biggest rule is the loan limit differs depending on the area.
Have questions or need more info? Contact us today! We’d love to sit down for a few minutes for a free consultation on which type of mortgage we recommend.
Conventional loans never have up front mortgage insurance like government loans might.
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