Conventional Home Loans

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 15, 20 or 30-year terms at a fixed interest rate, which means your monthly payment won’t change with fluctuations in the market. Conventional loans are typically a good choice for buyers who may not have a large down payment ready, like first-time home buyers.

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 great rate, 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 not backed by a government agency or program and 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 limit guidelines 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 to sponsor and instead are funded by lenders.

 

What are the Benefits of a Conventional Loan?

Conventional loans are a very popular choice for many home buyers because of the robust financial benefits available, such as:

• Multiple low-interest rate options that do not change with the market
• Quick and easy loan processing options
  Lees upfront fees
• 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 home buyers. However, it is important to understand how such loans work, including the options available for you to get started.

How Does a Conventional Loan Work?

In general, conventional loans are harder to qualify for than government-backed loans. Since conventional home loans are not backed by the government, the lender is at greater risk. This means, if the borrower is unable to make mortgage payments, the lender will try to recoup the remaining mortgage balance through short sale or foreclosure.

What Conventional Loan Calculators are Available?

Choose a mortgage calculator with taxes, 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 the best option for you.

How To Qualify for a Conventional Loan?

Since conventional loans are not government-backed and therefore are a bigger risk for lenders, the qualification process can be a bit more strict. Borrowers looking to obtain a conventional home loan should have 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 can 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 with good credit and little debt 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 get a personalized loan to perfectly 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.