Conventional Loan

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Conventional loans are a popular mortgage option that is not insured or guaranteed by a government agency, such as FHA, VA, or USDA loans. They are ideal for borrowers with strong credit, stable income, and a sufficient down payment.

Key Features of Conventional Loans

• Flexibility: Available for primary residences, second homes, and investment properties.
• Loan Limits: Conforming loans adhere to limits set by the Federal Housing Finance Agency (FHFA); non-conforming (jumbo) loans exceed these limits.
• Down Payment Options: Typically requires 5%-20% down, but some programs allow as little as 3% for first-time homebuyers.
• Credit Requirements: Best suited for borrowers with a credit score of 620 or higher.
• Private Mortgage Insurance (PMI): Required if the down payment is less than 20%, but can be removed once equity reaches 20%.
• Terms: Fixed and adjustable-rate options available, with terms commonly ranging from 10 to 30 years.

Advantages of Conventional Loans

• Competitive interest rates for qualified borrowers.
• More flexibility in property types and loan terms.
• No upfront mortgage insurance premiums, unlike FHA loans.
• First-Time Homebuyer Perks: First-time buyers may qualify for as little as 3% down and may also be eligible for grants and down payment assistance.

Who Should Consider a Conventional Loan?

• Borrowers with a strong credit profile
• Those with sufficient savings for a down payment and closing costs
• Buyers seeking flexibility in property types, including second homes or investment properties

Conventional loans provide an excellent pathway for many homebuyers, offering a balance of affordability and flexibility.