If you’re shopping for a home and exploring mortgage options, you’ve likely come across the term conventional mortgage. As one of the most popular loan types in the market, a conventional mortgage offers flexibility and competitive rates for those with a solid financial standing. Whether you’re a first-time buyer or a seasoned homeowner, understanding how conventional loans work can help you make the right decision for your home financing needs.
Take the first step today! Get pre-approved for a conventional mortgage and start your journey to homeownership.
What Is A Conventional Mortgage?
A conventional mortgage is a home loan that is not backed by the government. This means that unlike FHA, VA, or USDA loans, conventional mortgages are offered by private lenders like banks and mortgage companies. These loans typically have more stringent credit and income requirements, but they also come with more flexibility and fewer restrictions on the type of home you can buy.
Curious about your options? Contact us to learn more about whether a conventional mortgage fits your homebuying plans.
Types Of Conventional Mortgages
There are two main types of conventional mortgages: conforming and non-conforming. Conforming loans adhere to the guidelines set by Fannie Mae and Freddie Mac, which include loan limits and credit score requirements. Non-conforming loans, also known as jumbo loans, allow you to borrow more than the conforming loan limit, but typically come with stricter requirements.
Which type is right for you? Talk to a loan expert to find out which conventional loan option suits your homebuying needs.
Conventional Loan Requirements
To qualify for a conventional mortgage, lenders typically look for a credit score of 620 or higher, a down payment of at least 3%, and a debt-to-income ratio (DTI) below 50%. If you have a larger down payment, you can avoid private mortgage insurance (PMI), which is required if you put down less than 20%. Conventional loans are a great choice if you have solid credit and want to minimize your overall borrowing costs.
Ready to see if you qualify? Get pre-approved now and see how much home you can afford with a conventional loan.
Benefits Of A Conventional Mortgage
One of the biggest advantages of a conventional mortgage is that it typically offers lower interest rates than government-backed loans if you have a strong credit profile. Additionally, you’ll have more options when it comes to the type of property you can buy—whether it’s a single-family home, condo, or vacation property. Plus, once you reach 20% equity in your home, you can cancel your PMI, which can significantly reduce your monthly payments.
Discover the benefits: Contact us today to learn how a conventional mortgage could save you money over time.
Conventional Mortgage vs. FHA Loans
While FHA loans are often a go-to for first-time buyers with lower credit scores, a conventional mortgage could be a better fit if you have a higher credit score and a larger down payment saved up. Unlike FHA loans, conventional loans don’t require mortgage insurance for the life of the loan, and they often come with lower long-term costs. It’s important to weigh the pros and cons of each loan type before making a decision.
Not sure which loan is best for you? Speak with a loan specialist to compare FHA and conventional mortgage options.
Is A Conventional Loan Right For You?
A conventional mortgage is ideal for borrowers with good credit, a stable income, and the ability to make a decent down payment. If you’re looking for flexibility in the type of property you can purchase and want to avoid long-term mortgage insurance costs, a conventional loan may be your best bet. It’s a great option for both first-time buyers and those looking to upgrade to a larger home.
Find out if a conventional loan is the best choice: Get pre-approved now and start your journey toward affordable homeownership.
Conclusion
Conventional mortgages offer flexibility, lower interest rates, and fewer restrictions on property types, making them a popular choice for many homebuyers. Whether you’re purchasing your first home or looking to refinance, a conventional loan could provide the perfect balance of affordability and flexibility.
Ready to get started? Contact Better Rate Mortgage today to see if a conventional loan is the right fit for your homebuying goals.
Sean Zalmanoff 10/11/24