Midland Conventional Home Loans

Knowing that so many options are available to finance a home purchase can be comforting and intimidating. One of them is the conventional loan. Over sixty percent of all mortgage applicants choose conventional mortgages because they are the most widely available and widely offered by lenders. 

What are Conventional Loans?

Conventional loans are home loans not guaranteed by a government agency (like the Federal Housing Administration for FHA loans or the U.S. Department of Agriculture for USDA loans). Lenders receive no government protection or insurance if a borrower fails to repay the loan.

Conventional loans are classified into two types: conforming and non-conforming. Conforming loans adhere to Fannie Mae and Freddie Mac lending guidelines, while non-conforming loans exceed the conforming loan limits that Fannie Mae and Freddie Mac set each year.

Some Important Details About Conventional Loans

Since conventional loans don’t have a government guarantee against default, lenders take on more risk. Because of this, conventional mortgages tend to have stricter requirements than government-backed mortgages. On the other hand, securing a conventional loan should be easy if you have a solid credit history and enough money saved for a larger down payment.

Here are some basic details to be aware of if you’re considering a conventional loan to finance your home purchase:

• Credit Score Requirement:

Even though some lenders may require a credit score of 660 or higher, it is possible to be approved for a conforming conventional loan with a 620 credit score.

• Down Payment Requirement:

Conventional mortgage loans are available with down payments as low as 3%, and some lenders have unique programs that allow for 100% financing. But while a low down payment is tempting, you will have to pay mortgage insurance if you put down less than 20% of the home’s purchase price. 

• Maximum Loan Amount:

In 2022, you can purchase a single-family home that costs up to $647,200 with a conforming conventional loan ($970,800 if you reside in a high-cost area). If the property you wish to purchase costs more than that, you’ll have to take out a jumbo loan.

• Loan terms: 

Although conventional loans are typically repaid over 30 years, they can be approved for a 15- or 20-year conventional mortgage loan.

• Interest rates: 

It’s possible to get a conventional loan with either a fixed interest rate or an adjustable one. Both your credit score and credit history will play a significant role in determining your interest rate. The better your credit is, the lower your interest rate will be.

Conventional Loan vs. Government-Backed Mortgages

Certain government-insured mortgage loans have unique features that can make them a good fit for certain homebuyers. For example, VA and USDA loans have no down payment, while FHA loans only require 3.5% down from people with credit scores of 580 or higher. Also, government-backed mortgages typically have lower qualifying credit and income requirements, making them more accessible to the average American. 

Conventional and government-guaranteed loans have advantages and disadvantages, so it’s essential to carefully consider your financial situation before making a decision. Even though government-backed loans are generally easier to obtain, borrowers with excellent credit or those who can afford to pay larger down payments may find better terms with a conventional loan. 

Apply for a Conventional Loan in Midland

Whether this is your first or fifth time getting a home loan, Capital Home Mortgage can help you buy the property you want.

We understand how challenging it can be to get approved for a home loan, even more so if you’re a first-time homebuyer. With our distinct advantage as a direct mortgage lender in the state, we can help you secure the perfect mortgage for your lifestyle and budget. We have the tools and resources to expedite the loan process and close the loan without delays. 

Let’s talk about your home loan options. Call us today at (432) 218-4828.