As defined by the website Investopedia, a conventional mortgage or loan is:
Any type of home buyer’s loan that is not offered or secured by a government entity, such as the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA) or the USDA Rural Housing Service, but instead is available through or guaranteed by a private lender or the two government-sponsored enterprises, the Federal National Mortgage Association (Fannie Mae)and the Federal Home Loan Mortgage Corporation (Freddie Mac).
Conventional mortgages are the the most common type of mortgage loan. In the US, two-thirds of mortgages that are issued are conventional loans.
While all the other programs may get more press, the more strict requirements for conventional mortgages gives home buyers a head start over other buyers who have lesser qualifications.
Homeowners with good credit and money for a larger down payment could avoid paying upfront mortgage insurance or monthly mortgage insurance like an FHA loan. There are several reasons why a conventional mortgage loan could be the best option for your next home purchase.
Here is a summary of the advantages, and also disadvantages, of conventional mortgages.
• Mortgage insurance not required if 80% loan to value (LTV) or less
• Cancel existing mortgage insurance at 80% LTV
• Can be used on all property types
• More loan program options
• Can hold numerous conventional loans
• No maximum loan limit
• Higher down payment requirements
• Higher credit score requirements
• May be more difficult to qualify for than FHA or other government-backed loan
• Mortgage insurance still required for loans above 80% LTV
If you are considering a conventional mortgage, you can start the process by calling us at (866) 532-0550 or using our Mortgage in a SNAP application.