Conventional (conforming) loans follow lending guidelines set by Fannie Mae and Freddie Mac. You need a good credit score to qualify and will have access to flexible repayment term options.
Don’t have access to a 20% down payment to avoid private mortgage insurance? You can still qualify for a conventional loan with as little as 3% down, plus PMI payments until you reach 20% equity.
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Looking for a loan but unsure of your options? Conventional home loans are a great place to start. Conventional loans are private loans available in 10, 15, 20 or 30-year terms at a fixed interest rate, which means your monthly payment won’t change with fluctuations in the market.
Each conventional loan term comes with its own advantages. A 30-year fixed mortgage loan will give you lower monthly payments than a 15- or 20-year term mortgage loan. If you’re looking to get a better rate than with a longer-term loan, a 15-year fixed conventional mortgage loan will offer this and will help build equity faster to potentially pay off your home sooner. A 20-year fixed loan is the sweet spot between the two, giving you a shorter term than a 30-year loan and a smaller payment than a 15-year loan. Learn more about conventional home loans below and decide if this home buying option is right for you.
What is a Conventional Loan?
A conventional loan is a mortgage loan that follows guidelines set out by Fannie Mae and Freddie Mac. Conventional loans can be broken down into “conforming” and “non-conforming” loans.
What Types of Conventional Loans are Available?
There are two types of conventional home loans: conforming and non-conforming. Conforming loans meet the loan limits set by Fannie Mae or Freddie Mac. Non-conforming loans (also referred to as jumbo loans) are those with loan amounts too high for Fannie Mae or Freddie Mac and instead are provided by other mortgage lenders.
What are the Benefits of a Conventional Loan?
Conventional loans are a very popular choice for many home buyers because of the financial benefits available, such as:
- Multiple interest rate options that do not change with the market
- Multiple loan processing options
- Multiple down payment options that work for a variety of budgets
- Multiple term lengths on a fixed-rate mortgage that provide flexibility and many paths to reach your homeownership goals
- Ability to avoid paying private mortgage insurance (PMI) in some instances
- Ability to purchase more property types, including a second home or investment property
With the vast benefits of conventional loans, it is no surprise they are an appealing option to many homebuyers. However, it is important to understand how such loans work, including the options available for you to get started.
What Conventional Loan Calculators are Available?
Choose a mortgage calculator with taxes, homeowner association (HOA) fee and insurance inputs to get a realistic idea of what your monthly conventional loan mortgage payment could look like. This will help you determine if conventional loans are a suitable option for you.
How To Qualify for a Conventional Loan?
Borrowers looking to obtain a conventional home loan may need good credit and some money (3 percent or more) for a down payment.
How to Find Conventional Loan Rates Today?
Find and compare mortgage rates for conventional loans against other popular loan options with Wyndham Capital’s rate comparison tool. This rate comparison tool lets you see what today’s conventional loan rates are from leading lenders.
What are Conventional Loan Requirements?
To qualify for a conventional home loan, borrowers typically need a credit score no lower than 620 and at least 3 percent available for a down payment. Borrowers with lower credit scores may need a larger down payment.
How Much Down for a Conventional Loan?
Conventional loans require a down payment as little as 3 percent. Borrowers that can afford a down payment of 20 percent or more may be able to avoid paying private mortgage insurance (PMI), an additional cost added to your monthly mortgage payment.
Is a Conventional Loan a Good Option?
Conventional loans are a great option for borrowers who are interested in low interest rates and a flexible down payment option. Borrowers with a large down payment available can build equity more quickly with a conventional mortgage since there is a higher payment upfront. Coupled with the vast benefits of conventional loans, this home buying option may be the right choice for you.
Wyndham Capital’s digitally-driven processes make it easy to compare rates and apply for a personalized loan that could fit your needs. Talk with one of our dedicated mortgage consultants today to see if a conventional loan is right for you and discover the difference a modern mortgage company can make.