Conventional Loans

A conventional mortgage is a home loan that isn’t guaranteed or insured by the federal government. Conform to the requirements by Fannie Mae and Freddie Mac. A conventional mortgage 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 mortgage insurance premiums, which are typically required with FHA loans.
Conventional mortgage borrowers typically make larger down payments, have secure financial standing and are at low risk of defaulting.
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 payment 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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