What is a Conventional Loan? A conventional mortgage refers to a loan not insured or guaranteed by the federal government but conforms to Fannie Mae or Freddie Mac lending guidelines. Conventional loans are designed for good-to-great credit and income consumers, who have money saved up for a down payment. For loans with 20% equity / down payment, there is no mortgage insurance required. For loans with an LTV (Loan-to-Value) ratio higher than 80%, the mortgage insurance premium is typically less expensive compared to FHA loans typically if you have a credit score of 700 or better. Cash-out Refinance loans usually up to 85% of the home’s value, and in some cases higher, depending on the lender.
Mortgage lenders require a minimum score of 620 to qualify for a conventional loan — but that’s the minimum only. To secure the lowest interest rate and the best deal, you’ll want a credit score of 740 or higher, with a minimum credit score of 700 otherwise considering an FHA Loan may make sense.
We’re here to make getting a Conventional Loan easier with our technology, tools, and expertise that will guide you along the way. We’ll help you understand the differences between loan programs and options, empowering you to make the best-informed decisions on what is right for you. Use our Conventional Mortgage Calculator to estimate monthly payments.
The traditional 30-year fixed-rate mortgage has a constant interest rate and monthly payments that never change.
A 30-year fixed-rate loan is a great option to keep your monthly mortgage payment lower or if you plan on staying in your home for years to come.
Whether 15 or 30 years or a customized term length (yes, we can do that), all the conventional loans we offer come with no prepayment penalty or early payment penalty.
So you can make additional payments to lower your interest and shave years off the mortgage term.
The reality is that most people will have moved or refinanced before they reach that 30-year mark and with equity growth use it to eliminate their mortgage. Looking for something more flexible? You can pick your mortgage term length. We offer mortgage terms from 8 – 30 Years.
This conventional loan is fully amortized over a 15-year period and features constant monthly payments.
It offers all the advantages of the 30-year loan, plus a lower interest rate and you’ll own your home twice as fast.
The disadvantage is that, with a 15-year loan, you commit to a higher monthly payment that cannot be changed later.
We advise many borrowers to opt for a 30-year fixed-rate loan with no pre-payment penalty and voluntarily make one to two extra principal payments each year (every 6 months for example). This will reduce your principal and have a similar effect while not locking you into a higher monthly mortgage payment as with a 15-year loan.
There are other strategies as well, such as making biweekly mortgage payments.
An Adjustable Rate Mortgage, unlike fixed-rate mortgages that have an interest rate that remains the same for the life of the loan, has a variable interest rate that changes periodically.
There are limitations to frequency and the amount it can increase, however, once the fixed period expires, usually for 3, 5, 7, or 10 years.
The initial interest rate of an ARM is typically lower than that of a fixed-rate mortgage, but not always enough to warrant the fluctuations.
Consequently, an ARM may be a good option to consider if:
Fannie Mae HomeReady™ and Freddie Mac Home Possible® are ideal conventional loans for low-to-moderate-income qualified homebuyers in high-cost or underserved communities. They are also great for first-time home buyers.
HomeReady™ and Home Possible® offer conventional alternatives to FHA loans with competitive pricing on fixed-and adjustable-rate loans with down payments as low as 3% which is lower than a 3.5 % on an FHA loan if you have good credit.
These are a great option for First Time Home Buyers with good credit.
These loans can also be used in conjunction with available Down Payment Assistance (DPA) programs as well.
Consult with us today to review your best options.
When rates are low, fixed rates are generally not much more expensive than adjustable rates and may be a better deal long-term, because you can lock in the rate for the life of your loan.
Today’s Conventional Mortgage Rates:
* Some qualifications, terms and conditions apply. Inquire for more details.
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