What Is A Conventional Mortgage
Cary, NC
A conventional mortgage loan is a home loan that isn’t guaranteed or insured by the federal government. Conventional mortgages that conform to the requirements set forth by Fannie Mae and Freddie Mac typically require down payments of at least 3%. Borrowers who put at least 20% down do not have to pay for mortgage insurance, which is typically required with FHA loans.
CONVENTIONAL LOAN CARY NC
Conventional Fixed Rate Mortgage vs FHA
Conventional mortgages are offered by many lenders that also offer FHA, VA and USDA loans. Lenders view conventional loans as riskier because they’re not guaranteed by the government if a buyer defaults, so these mortgages can have tougher requirements and higher rates.
Conventional mortgage borrowers typically make larger down payments than FHA borrowers, and they tend to have a more secure financial standing and are less likely to default. A larger down payment means lower monthly payments. Plus, with the ever-increasing mortgage insurance premiums on FHA loans, payments for conventional loans that don’t require private mortgage insurance can be much more manageable in comparison.
In addition, with a conventional loan, you can cancel your mortgage insurance when the principal loan balance drops to 78% of the home’s value. FHA loans charge mortgage insurance premiums for the life of the loan.
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