What is a Conventional Mortgage?
A conventional mortgage refers to a loan that is not insured or guaranteed by the federal government. A conventional or conforming mortgage adheres to the guidelines set by Fannie Mae and Freddie Mac. It can be either a fixed or adjustable rate.
Why should I choose a Conventional Mortgage?
There are a number of good reason to do a conventional mortgage. You will get interest rates and loan terms for starts as well conventional mortgages are for people with;
- Good credit and low down payment
- There are no prepayments for a conventional conforming loan
- You can purchase a primary residence, second home or investment property
- Conventional loans are available in all areas
- Conventional mortgages offer a variety of terms 10, 15, 20, 25, 30 and 40. Your lowest interest rates will be with a 15 or 30 year mortgage.
Can I quality for a Conventional Mortgage?
In order to qualify for a conventional mortgage you must meet very specific lending guidelines. Here are some of the things that will be looked at in making a decision as to whether or not you will qualify for a conventional loan.
- Your debt to income ratio
- Your credit history
- Type of property
- Loan Amount requested
When applying for a conventional mortgage for the purchase of a new home you will be required a minimum down payment of somewhere around 5% to 20% of the purchase price of the home.
As an example if the purchase price is $200,000 you would be looking at a down payment of anywhere from $10,000.00 to $40,000.00
Types of loans available with a conventional mortgage
Most convention mortgages are fixed rate mortgages. With a fixed rate mortgage your interest rate stays fixed for the duration on the loan. Your best interest rates with a fixed rate conventional mortgage will be either a 15 or 20 year loan.
You also have an option of adjustable rate loans. This type of conventional mortgage will start out with a low interest rate but will change over the period of the loan.
For more information on convention loans and whether are not you qualify click the button below!