Conventional loans are among the most popular mortgage types because they’re simple to understand and customized for your needs. Conventional loans are a type of mortgage that follows Fannie Mae and Freddie Mac’s lending rules. This means they’re originated by private lenders such as banks, credit unions, or other financial institutions offering government-insured mortgages for those with low down payments and special needs.
Getting a conventional mortgage loan is not difficult, but it does require some leg work.
The first step is to find the type of home you are looking for and set your budget. Then go to one or more lenders in person or online and find out what kind of mortgage they offer. You will need to provide financial information such as how much money you make, whether you have other debts like car payments or credit card bills, your current monthly housing payment, if any, and the amount of cash available for a down payment on your house purchase. The lender will then run a credit check, including checking with the major credit bureaus Equifax, Experian, and TransUnion, along with an independent agency that tracks rental histories (if applicable). The lender will then give you an approval letter (or pre-qualification) stating how much they are willing to lend you. Once you select a home, you must apply for the mortgage and get approved by the seller’s real estate agent before making an offer on the house. Finally, you must submit a down payment at least equal to the amount stated in your pre-qualification letter. To get a conventional mortgage, you must meet these basic guidelines set by Fannie Mae and Freddie Mac:
A conventional loan is a type of loan in which you put down less than 20% of the cost and must meet specific guidelines.
The minimum down payment for a conventional mortgage is 3.0%.
The conventional loan has several down payment requirements, ranging from 3% to 20%. Unfortunately, there is no shortage of low-cost financing available from the 10% piggyback loan and 3-percenter conventional 97 loans. How do you qualify? Simply by matching Fannie Mac’s criteria!
A conventional loan is a mortgage that is not insured or guaranteed by the federal government. This distinguishes it from a government-backed loan, such as a Federal Housing Administration (FHA) loan or a Veterans Affairs (VA) loan. Private lenders offer conventional loans and are typically more expensive than government-backed loans.
The Difference Between Conventional and Government Loans
Conventional: A conventional loan is not backed by a government agency. This means that the lender assumes responsibility for any loan default rather than the federal government. This causes such loans to be riskier for lenders, which in turn causes such loans to be more expensive than those backed by a government agency.
Government-Backed: A government-backed loan is insured or guaranteed by a federal agency, such as the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). These loans are generally offered to borrowers with less than perfect credit, smaller down payments or lack of income verification.
There are different types of conventional loans depending on the purpose of the loan. Some common types include:
Each type has its specific requirements to qualify for the loan. For example, to get a loan to purchase a home, you need to provide documentation proving your income and assets meet specific criteria.
In 2022, the maximum amount you can borrow on a conforming conventional loan will be $647,200, an increase from the current limit of $584,250 in 2021.
The conventional loan is the most common type of home purchase. With this, you can buy and refinance your primary residence and other properties such as vacation homes or rental apartments!
Goldstar Mortgage is here to help! Our experienced loan advisors can design a mortgage that meets your needs. Whether you’re looking for an FHA, VA, or USDA home loan, we have the perfect option just waiting.
To speak with one of our experienced loan advisors, please call 954-568-7876 or visit our loan application page https://flfl02.mymortgage-online.com/loan-app/?siteId=1186069831&lar=mballard.