A conventional loan is ideal for those who make larger down payments and have a stronger credit profile. Unlike government backed loans (FHA,VA,USDA), conventional loans are not insured by government agencies. So they conform to underwriting guidelines set forth by Fannie Mae and Freddie Mac. Therefore, you will find that the higher the credit score, the lower the interest rate. Times have changed, so this isn’t your 1980’s conventional loan. You don’t need 20% down. In fact, this is a big misconception about conventional loans.
Many recent changes have expanded the available pool of mortgages to buyers through conventional loans.Bear in mind, if you are buying an investment property you will need a conventional loan. Sometimes condos (unless FHA/VA approved) require that you buy using a conventional loan as well.
For many this is an ambiguous question when they start the process of getting pre-approved to buy a home. What factors make conventional loans better for one than an FHA loan would be? When does FHA apply better to someone compared to a conventional loan? How are the two loans different? How is mortgage insurance different between the two loan types? Which of the loan types allows higher debt ratios? Which is more forgiving on credit? For some basic information on a comparison, check out this blog
The Mortgage Maestro Group is a locally operated mortgage bank with years of experience. We have helped thousands of homeowners navigate the seas of conventional loan options. Our guiding light is that.we work with honesty and integrity every step of the way. Don’t just take our word for it, check Google here. When it comes to conventional loans aligning with the right structure and strategy can help you avoid costly borrower mistakes. Make sure you are working with a lender that explains and educates you on the options available to you.