Conventional mortgage loans are a type of home loan that is not guaranteed or insured by the government, such as the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), or the United States Department of Agriculture (USDA). Instead, conventional loans are backed by private lenders and investors.
Conventional loans typically have stricter credit and income requirements than government-backed loans. Borrowers are usually required to have a credit score of at least 620, although some lenders may require a higher score. They may also require a higher down payment than government-backed loans, ranging from 3% to 20% of the home's purchase price.
One advantage of a conventional loan is that it can be used to finance a variety of property types, including primary residences, second homes, and investment properties. Conventional loans also offer a variety of loan terms, such as fixed-rate and adjustable-rate mortgages, and may have lower interest rates than government-backed loans.
Conventional loans also have a maximum loan limit set by the Federal Housing Finance Agency (FHFA) each year. In most areas of the United States, the limit for a conventional loan is $548,250 in 2021. However, in high-cost areas, the limit may be higher.
Arigato Capital is a specialist in conventional loans and will guide you through the entire loan process.
Comments