Buying a home in Annapolis or Anne Arundel County? Conventional loans offer flexible options for qualified first-time and repeat homebuyers, including low-down-payment programs and potential mortgage insurance savings.
Stuart Kiehne, President of Redwood Mortgage Services (NMLS #92008), has helped homebuyers navigate mortgage financing since 1999.
What Are Conventional Loans?
Conventional Loans in Annapolis, Maryland
Quick Answer: Conventional mortgages offer flexible home financing for qualified buyers in Annapolis and throughout Maryland. Some eligible first-time and repeat buyers may qualify with as little as 3% down. Conventional loans can finance primary residences, second homes, and investment properties, with down payment and qualification requirements varying by program.
Unlike FHA, VA, and USDA loans, conventional mortgages are not insured or guaranteed by the federal government. Many follow lending guidelines established by Fannie Mae or Freddie Mac.
At Redwood Mortgage Services, Stuart Kiehne (NMLS #92008) helps buyers compare conventional mortgage options, evaluate their estimated monthly payments, and understand the costs involved in purchasing or refinancing a home.
Conventional Loan Highlights
- Down payments as low as 3% for eligible borrowers and programs
- Available for first-time and repeat homebuyers
- Fixed-rate and adjustable-rate mortgage options
- Financing for eligible primary residences, second homes, and investment properties
- No FHA-style upfront mortgage insurance premium
- Private mortgage insurance may be removable when eligibility requirements are met
- Multiple loan-term options, depending on the program
How Much Down Payment Do You Need for a Conventional Loan?
Some conventional loan programs allow eligible buyers to purchase a primary residence with as little as 3% down. Other programs and property types may require 5%, 10%, 20%, or more.
Your minimum down payment depends on factors such as the loan program, occupancy type, credit profile, and property being financed.
CONVENTIONAL DOWN PAYMENT EXAMPLE
On a $400,000 home purchase
$12,000
3% Down Payment
Illustrative example for an eligible 3%-down conventional program. Closing costs, prepaid expenses, and other charges are additional. Not all borrowers qualify.
Are Conventional Loans Good for First-Time Homebuyers?
Yes. Conventional financing can be a strong option for eligible first-time homebuyers, especially those who qualify for a low-down-payment program.
Depending on the program, qualifying buyers may benefit from reduced mortgage insurance costs, flexible down payment options, or other available features.
Conventional loans are not limited to first-time buyers. Eligible repeat buyers may also qualify for certain low-down-payment options.
Conventional Loans vs. FHA Loans: Which Is Better?
Neither loan type is automatically better for every borrower. The right choice depends on your credit profile, available down payment, mortgage insurance costs, and long-term financial goals.
Conventional Loans
May offer down payments as low as 3% for eligible borrowers, flexible property options, and private mortgage insurance that may be canceled when applicable requirements are satisfied.
FHA Loans
May allow down payments as low as 3.5% for eligible borrowers and can offer more flexible credit qualification guidelines in certain circumstances. FHA loans generally require both upfront and annual mortgage insurance premiums.
The best comparison considers the interest rate, annual percentage rate (APR), monthly payment, mortgage insurance, closing costs, and expected time in the home.
Learn more about FHA loans in Annapolis and Maryland.
Why Choose a Conventional Loan?
Conventional mortgages offer several potential advantages for qualified homebuyers and homeowners.
Competitive Financing Options
Rates and overall costs can be competitive depending on credit, down payment, market conditions, and other factors.
Flexible Property Types
Eligible primary residences, second homes, and investment properties may qualify, subject to program requirements.
Mortgage Insurance Options
Private mortgage insurance is generally required on many conventional loans with less than 20% down. Depending on the loan, it may be canceled when applicable equity and servicing requirements are met.
Loan-Term Flexibility
Various fixed-rate and adjustable-rate options may be available, allowing borrowers to compare payment structures and repayment terms.
The available features and costs depend on the individual loan program and borrower qualifications.
What Types of Property Qualify for Conventional Financing?
Depending on the loan program and eligibility requirements, conventional mortgages may finance:
- Single-family homes
- Eligible condominium units
- Planned unit developments (PUDs)
- Eligible two- to four-unit properties
- Primary residences
- Second homes
- Investment properties
Down payment, reserve, credit, and other requirements may differ significantly by property and occupancy type.
What Do Lenders Review for Conventional Loan Approval?
Conventional loan eligibility depends on the overall financial picture. Common considerations include:
- Credit history and credit scores
- Employment and qualifying income
- Debt-to-income ratio
- Down payment and available assets
- Property type and occupancy
- Appraisal and property eligibility
- Applicable loan limits and program requirements
Requirements vary by lender, loan product, and individual circumstances. A mortgage pre-approval can help establish which financing options may be available before you begin shopping for a home.
Conventional Mortgage Guidance in Annapolis and Anne Arundel County
Redwood Mortgage Services helps homebuyers and homeowners in Annapolis, Arnold, Severna Park, Crofton, Edgewater, Davidsonville, Pasadena, Odenton, and surrounding Maryland communities explore conventional mortgage financing.
Stuart Kiehne, President of Redwood Mortgage Services (NMLS #92008), has helped borrowers navigate mortgage financing since 1999.
Whether you're purchasing your first home, moving to a larger property, buying an eligible investment property, or considering a refinance, Stuart can help you compare financing options and understand estimated costs.
Redwood Mortgage Services also serves borrowers in Delaware, Virginia, Washington, DC, North Carolina, and Florida.
Get a Personalized Conventional Loan Comparison
Wondering whether a 3%-down conventional loan, FHA financing, or another mortgage program makes the most sense for your purchase?
Stuart Kiehne can help you review available options, compare estimated payments and closing costs, and determine your next steps.
Key Features of Conventional Loans
Not Government-Insured
Unlike FHA, VA, or USDA loans, but meet Fannie Mae/Freddie Mac guidelines
Better Rates & Terms
Typically lower rates and fees than other loan types
5% Minimum Down Payment
For qualified borrowers with good credit
Flexible Property Types
Primary residence, second home, or investment property
Frequently Asked Questions about Conventional Loans in Maryland
Conventional loans are not insured by the government, while FHA, VA, and USDA loans are government-backed. Conventional loans typically offer better rates and terms but have stricter qualification requirements regarding credit score and down payment.
Yes, one of the benefits of conventional loans is that PMI can be removed once you reach 20% equity in your home. You can request PMI removal once you reach 20% equity, and it's automatically removed when you reach 22% equity.
Not necessarily. In fact, if you are a reasonably astute shopper, you will probably do better dealing with a mortgage broker. Mortgage brokers do not add any net cost to the lending process, because they perform functions that would otherwise have to be done by employees of the lender. Furthermore, because mortgage brokers deal with multiple lenders -- in a typical case, 25 to 30, sometimes more -- they can shop for the best terms available on any given day. In addition, they can find the lenders who specialize in various market niches that many other lenders avoid, such as loans to applicants with poor credit ratings, loans to borrowers who do not intend to occupy the property, loans with minimal or no down payment, and so on.
Our mortgage professionals are ready to help you find the perfect conventional loan option for your needs.