A conventional loan is a type of mortgage that isn’t guaranteed or insured by any government agency. These include the Federal Housing Administration (FHA), the Farmers Home Administration (FMHA) and the Department of Veterans Affairs (VA). This type of loan is ideal for people with above-average credit. It is a fixed-term interest rate loan that requires excellent credit, a minimum down payment of 5% - 20 %, and a solid monthly income. Conventional loans are generally of two types:
Amortized - Conventional loans funded by lenders with the loan to value not less than 80%.
Adjustable - conventional loans that are fixed for a minimum of 3 to 7 years while the rest of the time is being subject to changes.
If you are buying your primary home, a second residence, or an investment property this may be the right loan. Apply now and let one of our experts find the best deal for you.
Most Common Types of Conventional Loans
Fixed Rate Mortgages: Your rate and payment never change.
30 Year Fixed Loan Benefits: Lowest fixed monthly payments
20 Year Fixed Loan Benefits: Low fixed monthly payments
15 Year Fixed Loan Benefits: Lower rate than the 30 or 20 Year Fixed Loans; Pay less interest and pay your home off more quickly.
10 Year Fixed Loan Benefits: Lower rate; Pay off your loan and build equity faster.
5 Year Fixed Loan Benefits: Lowest rate; Pay off your loan and build equity the fastest
Adjustable Rate Mortgages: After the initial period your interest rate can change once a year.
3/1 ARM Fixed Rate for 3 Years, Adjustable Rate for the remaining 27 years
5/1 ARM Fixed Rate for 5 Years, Adjustable Rate for the remaining 25 years
7/1 ARM Fixed Rate for 7 Years, Adjustable Rate for the remaining 23 years
What are the Conventional Down Payment Requirements?
For Purchase transactions Conventional Loans require the home-buyer to put down at least 5% - 20% of the purchase price of the home. For a Refinance transaction, most lenders require at least 10% equity in the property.
What types of property are eligible?
Most conventional loan programs allow you to purchase single-family homes, warrantable condos, planned unit developments, and 1-4 family residences. A conventional loan can also be used to finance a primary residence, second home and investment property.
Find Out if a Conventional Loan is Right for You
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