A conventional mortgage is a home loan neither guaranteed nor insured by the federal government. Almost all conventional loans conform to the standards of Fannie Mae and Freddie Mac and are thus labeled “conforming” mortgages.
There are dozens of reasons why a conventional mortgage may be right for you. It depends largely on your unique situation. Here are some key points that may help with your decision.
- Conventional loans come in 10-, 15-, 20-, 25- and 30-year fixed terms.
- Do not rule out adjustable-rate mortgage (ARM) options. These loans offer ultra-low rates for a period of 3, 5, 7 and 10-year fixed terms.
- The overall cost of private mortgage insurance (PMI) is typically less than that of a government-backed loan with mortgage insurance (MI).
- Avoid PMI by putting at least 20% down.
- Lower closing costs than other loans like FHA, VA, or USDA.
- Many sellers prefer to sell to people with conventional loans.
- Flexible qualification terms.
- Conventional loans are available for second home and investment properties.
- The conforming loan limit for one-unit in most counties nationwide is $647,200. However, in high-cost areas, loan limits for conforming loans cans be as high as $726,525.
Deciding on what loan type to use when purchasing a home can be confusing. Allow one of our licensed mortgage experts to assist you and get a quote with no obligation to proceed. Click below to get started with your pre-approval today.