Conventional loans are not offered by, insured or guaranteed by the government. These mortgage loans can be at a fixed rate or adjustable rate, and there are different loan terms offered such as 15 years or 30 years. These loans make up about 35-50% of all mortgages and for a strong credit profile they offer the most favorable terms. These loans can come as a fixed rate where the interest rate is set for the duration of your loan. Or, you can utilize an adjustable rate. Adjustable rates often start with a set fixed term and then have the potential to move in later years.
Conventional loans can be either conforming or non-conforming. Conforming loans meet Fannie Mae and Freddie Mac guidelines, while non-conforming loans do not.
The minimum down payment for a conventional loan is 5%, although sometimes only 3% is possible. Pricing will improve each 5% that you put down, up to a down payment of 40%. Additionally, pricing is also tiered based on your credit score. Typically, every 20 points of a credit score improvement up to a 760 you will see pricing improvement as well.
When putting less than 20% down, Conventional loans will come with some form of mortgage insurance. There are many ways to structure your Mortgage Insurance and we will work together to decide the best structure for your short-term and long-term goals.