Proud Supporters of
410-266-1621
NMLS ID # 91893
Proud Supporters of
410-266-1621
NMLS ID # 91893
Conventional loans are mortgages that are not insured or guaranteed by a government agency such as the FHA, VA or USDA. Many conventional loans follow guidelines established by Fannie Mae or Freddie Mac and can be used to purchase or refinance a primary residence, second home or eligible investment property. Depending on the loan program and borrower qualifications, down payments may be as low as 3%. Credit, income, debt-to-income ratio, assets, property type and other factors are considered when determining eligibility. Private mortgage insurance may be required when the down payment is less than 20%.
Fixed-Rate Mortgages
A fixed-rate mortgage has an interest rate that remains the same for the life of the loan. This provides predictable principal and interest payments, although the total monthly housing payment can still change due to property taxes, homeowners insurance and other costs. Fixed-rate conventional loans are available in different repayment terms depending on the loan program.
Adjustable-Rate Mortgages (ARMs)
An adjustable-rate mortgage generally begins with an interest rate that is fixed for an initial period. After that period, the interest rate may adjust at specified intervals based on the terms of the loan. ARMs include limits, or caps, on how much the interest rate can change. Whether a fixed-rate or adjustable-rate mortgage is appropriate depends on the borrower's goals, finances and plans for the property.
Conventional loan down payment requirements vary depending on the loan program, property type, occupancy and borrower qualifications. Some conventional programs may allow eligible borrowers to purchase a primary residence with as little as 3% down, while other situations may require a larger down payment. Private mortgage insurance is generally required when financing more than 80% of the home's value. Refinance equity requirements also vary based on the type of refinance, property and loan program.
Conventional financing may be available for a variety of eligible property types, including single-family homes, condominiums, planned unit developments and eligible 2- to 4-unit properties. Depending on the loan program and borrower qualifications, conventional loans may be used to finance a primary residence, second home or investment property. Property and occupancy requirements vary by loan program.