Great straightforward explanation of a conventional loan!
What is a Conventional Mortgage Loan?
A conventional mortgage refers to a loan that is not insured or guaranteed by the federal government. In contrast, an FHA mortgage loan is insured by the Federal Housing Authority and VA mortgage loans are backed by the Department of Veterans Affairs. Conventional loans can be either fixed or an adjustable rate.
Typical Requirements of Conventional Mortgage Loan
Conventional loans typically require a higher down payment than government loans. For consumers with a substantial down payment, equally or exceeding 20% of the purchase price of a home, private mortgage insurance (PMI) is not typically required.
Conventional loans are more beneficial to borrowers with higher credit scores. Borrowers with lower credit scores will typically face higher interest rates. In addition, borrowers with recent foreclosures or bankruptcies may not immediately qualify for a conventional mortgage loan.
Is a Conventional Mortgage Loan Better?
To determine which type of loan best suits your circumstances…
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