A conventional fixed-rate mortgage is one of the most popular choices for
homebuyers, especially if you’re new to the process. This type of loan means that
your monthly payments for principal and interest will stay the same throughout the
entire loan period. This stability makes budgeting much easier, as you’ll know exactly
what to expect each month.
One of the biggest advantages of conventional loans is that they often come with
lower interest rates and flexible down payment options, starting as low as 3%. This
means you don’t need to have a huge amount of money saved up to buy your home.
Additionally, you can choose a loan term that fits your needs, with options typically
ranging from 10 to 30 years.
Who Is This For?
This type of loan is particularly beneficial for buyers with a good credit score and
some savings set aside for a down payment. If you have been responsible with your
finances and have saved a bit, a conventional loan could be a great fit for you.
If you’re feeling uncertain about which mortgage program is right for you, don’t hesitate to reach out! Our knowledgeable loan professionals are here to help you find a solution tailored to your unique needs.
1. What organization sets the guidelines for conforming conventional loans?
The guidelines for conforming conventional loans are set by the Federal Housing Finance Agency (FHFA).
2. What are the different types of conventional loans available?
Conventional loans are available as fixed-rate, adjustable-rate, conforming, jumbo, and non-qualifying mortgages.
3. What distinguishes conventional loans from government-backed loans?
Conventional loans are mortgages that aren’t guaranteed or insured by the government; they are available through and backed by private lenders.
4. What is a fixed-rate mortgage, and how does it affect your payments?
A fixed-rate mortgage has an interest rate that never changes, meaning your monthly principal and interest payment remains the same for the entire length of the loan.
5. How does an adjustable-rate mortgage (ARM) work?
An adjustable-rate mortgage (ARM) offers a fixed introductory rate for the first three to 10 years of the loan. After that, the rate adjusts at preset intervals, such as annually or every six months, based on an index rate plus a margin determined by the lender.
6. What credit score do I need to qualify for a conventional loan?
While many mortgage lenders may expect a minimum credit score of around 620 to qualify for a conventional loan, it’s possible that a higher score could improve your chances of securing a better interest rate and loan terms. However, this isn’t guaranteed, as lenders may consider other factors as well.
7. How much do I need for a down payment on a conventional loan?
While the typical down payment for a conventional loan may be around 20 percent, it’s possible that some fixed-rate conventional loans for primary residences could allow a down payment as low as 3% or 5%. That said, the specific requirements could vary based on the lender and loan type.
30-Year Fixed-Rate Mortgage: The payment on a $200,000 30-year Fixed-Rate Loan at 4.375% and 75.00% loan-to-value (LTV) is $998.58 with 1.875 points due at closing. The Annual Percentage Rate (APR) is 4.635%. Payment does not include taxes and insurance premiums. The actual payment amount will be greater. Some state and county maximum loan amount restrictions may apply.
15-Year Fixed-Rate Mortgage: The payment on a $200,000 15-year Fixed-Rate Loan at 3.75% and 75.00% loan-to-value (LTV) is $1454.45 with 2 points due at closing. The Annual Percentage Rate (APR) is 4.214%. Payment does not include taxes and insurance premiums. The actual payment amount will be greater. Some state and county maximum loan amount restrictions may apply.
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