Conventional home mortgage loans are backed by financial institutions in the private sector. They are not tied to the government like some of the other types of loans. In uncertain economic times, Conventional mortgages have never looked so good. Interest rates are competitive and tied to a number of factors including down payment, equity, credit score, and debt-to-income ratio.
In most cases, rates with a Conventional loan are fixed for the life of the loan. The buyer can keep the monthly payment lower by making a larger down payment, (greater than 20%), in which case mortgage insurance will not be required. Unlike government loans, an upfront mortgage insurance premium is not required at closing, keeping the closing costs down. Conventional loan programs are now available up to 97% financing.
Benefits of a Conventional Home Mortgage?
✔ Competitive interest rates
✔ No MIP (Mortgage Insurance Premium)
✔ Flexible terms
The main advantage of a Conventional home mortgage loan is that the borrower could avoid paying extra upfront mortgage insurance premiums and possibly avoid paying the monthly mortgage insurance. Because the loan is backed by private financial institutions or investors, the terms can be more flexible and competitive. Conventional loans also permit higher loan amounts when compared to FHA loans, read more about the latest 2023 Conforming Loan Limits
Maximum Baseline Loan Amount for 2023
| Units | Most Locations | Select High-Cost Locations |
|---|---|---|
| 1 | $726,200 | $1,089,300 |
| 2 | $929,850 | $1,394,775 |
| 3 | $1,123,900 | $1,685,850 |
| 4 | $1,396,800 | $2,095,200 |
Please note all Conventional loan options require a min 620 credit score.
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