Conventional Loans
Conventional Loans
What Are Conventional Loans?
Unlike government-backed loans (like FHA or VA), conventional loans are not insured by a federal agency. Approval is based on your financial profile—credit, income, assets, and overall repayment ability.
Key Features of Conventional Loans
- Down Payment: Typically ranges from 3% to 20%, depending on the lender and loan type.
- Credit Score: A score of 620 or higher is usually required to qualify and secure better rates.
- Private Mortgage Insurance (PMI): Required if your down payment is under 20%, protecting the lender in case of default.
- Flexible Terms: Options include 15-, 20-, or 30-year fixed or adjustable rates, offering repayment flexibility.
Advantages of Conventional Loans
- No Upfront Insurance Premiums: Unlike FHA loans, there’s no upfront mortgage insurance requirement.
- No VA Funding Fee: You avoid the mandatory fee tied to VA loans.
- More Property Options: Finance a primary home, second home, or even an investment property.
- Higher Loan Limits: Conforming loan limits are often higher than government-backed programs, enabling you to finance more expensive homes without moving to a jumbo loan.
Considerations for Conventional Loans
- Stricter Requirements: Expect tighter criteria around credit scores, income, and debt-to-income (DTI) ratios.
- Higher Upfront Costs: Larger down payments and stronger credit scores may be necessary.
- PMI Costs: If your down payment is under 20%, budget for added PMI costs in your monthly payment.
- Market-Driven Terms: Your rate and approval can be affected by current market conditions, so staying informed is key.
Always consult a mortgage expert to evaluate your unique financial situation and help you choose the most suitable loan option.
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Phone Number
(800) 396-1496
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Email Address
approval@todayshomemortgage.com
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Address
27 Orchard rd # 111, Lake Forest, CA 92630
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