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 Loans
While Inlanta offers conventional loans with low down payment options (as low as 3%), most home buyers opt to put down a larger down payment. For consumers with a substantial down payment, equaling or exceeding 20% of the purchase price of a home, private mortgage insurance (PMI) is not typically required.
Conventional loans have higher credit requirements than most other loan programs. 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.
Are Conventional Loans Better?
To determine which type of loan best suits your needs, you must take some time to consider the pros and cons of each. Conventional loans are usually more appropriate for individuals with higher credit scores and at least a 20% down payment As mentioned above, private mortgage insurance is not required when a 20% down payment is made. If a 20% down payment is not feasible, mortgage insurance would be required until the 20% equity in the home is attained.
Government loans typically have lower minimum credit scores and lower down payment requirements but require mortgage insurance premiums. A big difference with conventional and government loans is that mortgage insurance premiums are required for the life of a government loan. The only way to eliminate FHA mortgage insurance premiums is to refinance. Mortgage insurance on conventional loans can be generally canceled on after the required LTV has been attained and the your account is in good standing.
So…Conventional or Government?
So are conventional mortgage loans better than government loans? It really depends on your situation. Our best advice is to contact us for a consultation. We will assess your financial situation and provide a recommendation that is most appropriate for your unique situation. We can explain the pros and cons of conventional financing and provide you with additional financing options including VA, USDA, and FHA mortgage loans.
Our Mission Statement
Our mission is to be the home financing partner that you trust to serve your family, friends and community. Through our family of dedicated mortgage professionals our commitment is to deliver an exceptional experience. Our unwavering dedication to integrity, honesty and ethics is the foundation of all of our relationships.
Inlanta Mortgage offers Fannie Mae/Freddie Mac agency products, as well as a full suite of jumbo and portfolio programs. The company is an agency approved lender for Fannie Mae, FHA/VA, FHA 203K and USDA. Inlanta Mortgage also offers numerous state bond agency programs. Review Inlanta’s mortgage loan programs here.
Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin. NMLS #1016.