Conventional loans are mortgage loans offered by non-government sponsored lenders. A conventional, or conforming, mortgage adheres to the guidelines set by Fannie Mae and Freddie Mac. It may have either a fixed or adjustable rate. Conventional loans offer flexible paying options.
Other than the typical 30 year term, borrowers can select 15 or 20 year terms if they want to pay off their loan sooner. (With the cost of higher monthly payments).
Additionaly, along with the usual fixed rate, conventional loans offer adjustable- rates. If you are someone who is planning to live at your home for approximately 3-10 years, adjustable rates may help you save money.
While many think that a 20% down payment is required for all conventional loans, many lenders now offer low down payment options as low as 3%.
In adition to purchasing a house, Conventional Loans are also common for 2nd homes and investment properties.
While popular, Conventioal Loans may require the borrower with a minimun income threshold, credit scores and usually have higher rates.
In contrast, FHA loans require private mortgage insurance (PMI). With conventional loans, PMI is optional depending on your downpayment. Lenders will require at least 20% downpayment. After less than 78% of the mortgage pricible is outstanding, then you’ll have the option to cancel PMI.
If you think Conventional Loans is right for you, ArmCor is proud to help you finance your home!