Conventional loans are the most popular type of home loan product across the nation. So what exactly is a conventional loan? They are of course a home loan program, but what makes them unique to other home loan programs is that they are loans that are secured by the standards that are set by Fannie Mae and Freddie Mac. If you are looking for a conventional loan in Florida or Georgia, please contact Keith Strausburg at 502-439-7981.
Fannie Mae and Freddie Mac are government created lending institutions to secure home loans, by purchasing them in a secondary mortgage market. This way, lenders can be more confident in loaning out money because they know the amount will be backed up. This is one of the main reasons why conventional loan interest rates are consistently some of the lowest of all home loan products.
Since Fannie Mae and Freddie Mac dominate the secondary mortgage market they set up a lot of the standards of which all conventional loans must follow. One of the standards is the amount for a required down payment. With a conventional loan program 20% down, has typically been the standard to avoid paying mortgage insurance. However there are now ways to put as little as 3% down with no mortgage insurance. However if you can afford the 20% down it has the big advantage that you are borrowing less money, so you will be paying tens of thousands of dollars less over the life of loan.
Financial standards can be more strict with conventional loans versus some other programs. You need to have good credit, but this is also why the interest rates are on the lower end. It might not be the right loan for every borrower, but if you add up all the factors, you can own a home for less money when you purchase a home with a conventional loan.
Another requirement that comes with a conventional loan is the limit to what amount a loan can go up to.
Common Conventional Loans Questions:
What is the maximum loan amount for conventional loans?
What is the minimum down payment for a conventional loan?
3% of the purchase price.
How much down payment is required to avoid mortgage insurance?
20% of the purchase price.
Are you required to escrows taxes and insurance on a conventional loan?
Not if you put down 20% of the purchase price.
Are there conventional loans for first time buyers?
Yes, Home Ready and Home Possible require less mortgage insurance and only 3% down payment.
If you are looking for a conventional loan in Florida or Georgia, I make it easy for you to see for how much you can qualify for with a conventional loan. Just visit my Purchase Assistant and I will get back to you with custom rate quote.