A conventional loan is the most popular type of loan and the one that most people think of when beginning their home search. Conventional loans are available for a wide range of buyers; everyone from first time homebuyers to seasoned investors use conventional loans to purchase property.
What is a conventional loan?
A conventional loan is the most common loan type. It can be used for primary residences, second homes, and investment properties.
A conventional loan requires a minimum credit score of 620 and a minimum down payment of 3% for first time home buyers, or 5% for repeat buyers. Second homes and investment properties have higher down payment requirements.
Conventional loans require mortgage insurance any time a down payment of less than 20% is provided. The cost of the mortgage insurance is calculated based on credit and the loan-to-value ratio of the transaction. Mortgage insurance will automatically drop off once the loan is paid down to 78% of the original purchase price or appraised value (whichever is lower). Mortgage insurance removal can be requested once the loan is paid down to 80% of the value.
Our loan experts can help you understand the ins and outs of a conventional loan and determine if it’s the best option for your mortgage needs.
Have questions? Give us a call! One of our mortgage specialists would be happy to answer all of your questions.
Lift Home Lending is not affiliated with or acting on behalf of or at the direction of FHA, VA, USDA or the Federal Government.