What is a Conventional Loan?
A conventional loan is a mortgage that is not insured or guaranteed by the federal government (FHA and VA loans, for example, are federally insured).
Conventional Home Loan Advantages
Conventional home loans are available for new home purchases and refinancing. They can sometimes be harder to qualify for because of additional credit and financial requirements. However, you‘ll generally find they offer much more flexible terms and fewer restrictions than government-backed loans. Advantages of conventional loans include:
- They are much simpler to apply and qualify for, with less paper work, and you’ll have fewer rules and regulations to meet.
- You have a lot more options to choose from, the terms are more flexible and easier to customize and match to your financial situation and goals.
- They can be used for almost all types of properties, from single- and multi-family homes to condominiums and even manufactured homes.
- If you have at least 20% to put down on a purchase, or at least 20% equity when refinancing, you are not required to pay mortgage insurance.
- Conventional loan rates are often quite low since we know borrower is financially stable and has good credit.