Conventional Mortgages

What is a Conventional Mortgage Loan?
A conventional mortgage loan is the most common type of mortgage in the United States. Whereas FHA mortgages are insured by the Department of Housing and Urban Development in case of default, conventional mortgage loans aren’t insured by any entity so the qualification to attain this type of loan are relatively high.
Since the bar is set high for qualification, conventional loans offer the most competitive interest rates on the market. Once the loan is funded, they are either held in the lender’s portfolio or bundled together and sold off to the secondary market of which the largest investors are Fannie Mae and Freddie Mac.
For this reason, the qualifications are typically set by these two agencies since they determine the types of loans that they purchase in bulk.
Who can benefit from a Conventional Loan?
There are no restrictions on who can qualify for conventional loans, however certain criteria must be met in order to get approved and ultimately funded for a conventional mortgage loan.
This criteria includes:
1. At least 5% down on a home purchase
2. Most lenders require a minimum of 660-680 credit scores
3. Debt to income ratios below 36% of the gross monthly income
4. Mandatory private mortgage insurance for loans greater than 80% of the purchase price or appraised value (may be lender paid at a higher interest rate)
5. Full documentation and asset disclosure
6. Stable work history for the last 2 consecutive years
What are the benefits of a Conventional Loan?
If and when a borrower qualifies for a conventional mortgage loan, there are also many benefits that can be realized. These benefits include:
1. Lenders may keep the loan in their own lending portfolio which allows some flexibility in the underwriting process
2. Ability to obtain secondary financing for qualification or to avoid mortgage insurance
3. Appraisals will only need to meet the lender’s guidelines instead of the strict appraisal standards of the Federal Housing Administration (FHA) and the Veterans Administration (VA).
4. Ability to opt out of paying mortgage insurance in place of lender financed mortgage insurance at a slightly higher interest rate to compensate for increased risk.
5. Attain a competitive fixed mortgage interest rate without pre-payment penalties
6. Can have multiple conventional loans on different properties and not be limited to one property at a time like other mortgage types.
What’s my next step?
All you have to do is call our office at 847-487-9915 or use the form on this website and schedule an appointment to get assessed on the best loan suitable for your situation. Best of all, its absolutely free with no obligations.

What is a Conventional Mortgage Loan?

A conventional mortgage loan is the most common type of mortgage in the United States. Whereas FHA mortgages are insured by the Department of Housing and Urban Development in case of default, conventional mortgage loans aren’t insured by any entity so the qualification to attain this type of loan are relatively high.

Since the bar is set high for qualification, conventional loans offer the most competitive interest rates on the market. Once the loan is funded, they are either held in the lender’s portfolio or bundled together and sold off to the secondary market of which the largest investors are Fannie Mae and Freddie Mac.

For this reason, the qualifications are typically set by these two agencies since they determine the types of loans that they purchase in bulk.

Who can benefit from a Conventional Loan?

There are no restrictions on who can qualify for conventional loans, however certain criteria must be met in order to get approved and ultimately funded for a conventional mortgage loan.

This criteria includes:

1. At least 5% down on a home purchase

2. Most lenders require a minimum of 660-680 credit scores

3. Debt to income ratios below 36% of the gross monthly income

4. Mandatory private mortgage insurance for loans greater than 80% of the purchase price or appraised value (may be lender paid at a higher interest rate)

5. Full documentation and asset disclosure

6. Stable work history for the last 2 consecutive years

What are the benefits of a Conventional Loan?

If and when a borrower qualifies for a conventional mortgage loan, there are also many benefits that can be realized. These benefits include:

1. Lenders may keep the loan in their own lending portfolio which allows some flexibility in the underwriting process

2. Ability to obtain secondary financing for qualification or to avoid mortgage insurance

3. Appraisals will only need to meet the lender’s guidelines instead of the strict appraisal standards of the Federal Housing Administration (FHA) and the Veterans Administration (VA).

4. Ability to opt out of paying mortgage insurance in place of lender financed mortgage insurance at a slightly higher interest rate to compensate for increased risk.

5. Attain a competitive fixed mortgage interest rate without pre-payment penalties

6. Can have multiple conventional loans on different properties and not be limited to one property at a time like other mortgage types.

What’s my next step?

All you have to do is call our office at 847-487-9915 or use the form on this website and schedule an appointment to get assessed on the best loan suitable for your situation. Best of all, its absolutely free with no obligations.