A conventional mortgage loan is a type of home loan not insured or guaranteed by the federal government. Instead, it is backed by private lenders, such as banks, credit unions, or mortgage banks.
Key Features of Conventional Mortgages
- Types: Conventional loans can be fixed-rate (with a consistent interest rate) or adjustable- rate (where the rate can change after a set period).
- Down Payment: Down payments can vary, but they typically start from 3% or 5% of the home’s purchase price. A down payment of less than 20% may require private mortgage insurance (PMI).
- Credit Requirements: Borrowers usually need a good credit score (typically 620 or higher) to qualify for a conventional loan.
- Loan Limits: Conventional loans have maximum loan limits set by the Federal Housing Finance Agency (FHFA), which can vary by location.
- Terms: The most common terms for conventional mortgages are 15 or 30 years, but other options may be available.
- Interest Rates: Conventional loans often have competitive interest rates, which can be fixed or adjustable.
- Flexibility: They can be used for various property types, including single-family homes, condos, townhomes, manufactured homes, and multi-family properties (up to four units).
Pros:
- Potentially lower interest rates compared to government-backed loans.
- No mortgage insurance is required with a 20% down payment.
- More flexibility in loan terms and property types.
Cons:
- Stricter credit and debt-to-income requirements.
- Larger down payments are needed compared to some government loans.
YOUR MORTGAGE EXPERTS SERVING OKLAHOMA CITY, OK
A conventional loan is what it sounds like – one of the most common types of loans used to buy homes. In more technical terms, a conventional loan is any loan that is not insured or guaranteed by a government agency and originates with a mortgage lender, bank, or credit union.
The majority of homeowners use some kind of conventional loan to finance their mortgages. We here at Local Lending Oklahoma are dedicated to helping clients across our service area find a loan that allows them to pursue their dream property and keep their monthly payments affordable.
Dean “The Mortgage Machine” Slatev has more than 25 years of experience helping new and current homeowners alike secure all kinds of conventional mortgages – from conforming loans to jumbo loans and loans with adjustable rates.
GET THE LOAN THAT WORKS FOR YOU
Our loan experts are dedicated to providing each and every client with the individualized service they deserve. We will determine your best option, whether it be a conventional loan or government-backed VA loan, and review it with you. Each type of loan comes with its own unique benefits, and we are here to help you find your perfect match.
We are proud to serve those throughout Oklahoma City, OK; Edmond, OK; Piedmont, OK; Yukon, OK; Mustang, OK; Tuttle, OK; Newcastle, OK; Blanchard, OK; Norman, OK; Moore, OK; Choctaw, OK; and Deer Creek, OK.