Learn About a Conventional Loan
A conventional loan is a type of mortgage that is not insured or guaranteed by the federal government, unlike government-backed loans such as FHA, VA, and USDA loans. This means that the lender assumes the risk of the loan and borrowers are required to meet certain eligibility criteria and financial requirements. If you're thinking of buying a home, check out the information below to see if a conventional loan may be a good option for you.
What Is a Conventional Loan?
A conventional mortgage is not insured or guaranteed by a government agency. It may be used for a purchase or refinance, subject to the lender, property and program requirements.
Conforming and Jumbo Loans
Conforming loans follow applicable Fannie Mae or Freddie Mac requirements, including loan limits that vary by year, location and number of units. Jumbo loans exceed the applicable conforming limit and have lender-specific limits and requirements. Conventional borrowing is not unlimited.
What Determines Eligibility?
The review considers credit history, income, debts, available funds, the property and the underwriting method. There is no single credit-score rule for every conventional loan. Lenders and individual programs may have additional requirements. Your advisor can identify the documents needed for your situation.
Compare the Full Cost
A conventional loan does not automatically have a lower rate or total cost than a government-backed loan. Compare available offers, including the rate, fees, mortgage insurance and cash needed at closing. A down payment below 20% typically requires private mortgage insurance.
Fixed and Adjustable Rates
A fixed-rate loan keeps the same interest rate for the loan term. An adjustable-rate mortgage can change after its initial period. Taxes, insurance and other payment components can change even with a fixed interest rate.
Find Your Next Step
Ask a TGBMC home loan advisor about your plans, call (469) 351-1081, or start your secure application. An inquiry is not a loan approval or rate lock.
Learn more: CFPB conventional-loan overview and Fannie Mae underwriting updates.
If you have any additional questions, be sure to contact The Good Buy Mortgage Company to see if a conventional loan is the right choice for you.
