A conventional loan is a loan that is not guaranteed or insured by any type of government program. For example Veterans Administration (VA) loans and Federal Housing Administration (FHA) loans are loans guaranteed by or insured by the government.
There are two types of conventional loans, conforming and nonconforming. A conforming loan falls within the rules and guidelines that have been set up by Fannie Mae and Freddie Mac. Nonconforming loans fall outside of the rules and regulations established by Fannie Mae and Freddie Mac.
There are many different features of conventional conforming and nonconforming loans. They can have a fixed or variable rate, and they can even have a balloon payment. Both have loan amount limits which change from year to year.
If you want a conventional loan your minimum down payment is 3%. If your down payment is less than 20 percent you will have to purchase private mortgage insurance (PMI).
To find out if a conventional loan is right for you please contact us today.