What is a Conventional Home Loan?
A conventional loan is a loan which is able to meet the income and down payment requirements without being backed by a government agency.
Typically, those who put down at least 20% down on their new home do not have to pay mortgage insurance. There are other mortgage loan options that have lower down payments.
Credit Scores for a Conventional Home Loan
In order to be approved for a conventional loan your credit score should generally be around 620.
Most conventional loans require a 3-20% down payment in addition to origination fees, mortgage insurance and appraisal fees.
Due to this, it is typically the case that conventional home loan yields a higher out of pocket cost than other mortgage loan options.
Should you choose to acquire a conventional home loan it is important that you know that once your loan balance drops to 78% of the home’s value you are able to cancel your mortgage.
Conforming vs. Nonconforming Loans
Conventional mortgages are typically divided between conforming and nonconforming loans.
Conforming loans follow government controlled guidelines for the housing market.
The size of the loan is often dictated based on where the loan is being acquired.
However, nonconforming loans are topically for borrowers you need a higher loan amount than that which is generally approved based on the area.
Perhaps most important part of deciding of a conventional loan is right for you is to seek the services of the most trusted mortgage professionals in your area.
At Buckingham Mortgage we have the highly trained professionals in the mortgage industry who can walk you through your options one step at a time.
Our licensed mortgage professionals are able to offer you so much more than what a big bank can offer including lower rates and cheaper costs.