Conventional Mortgages

What is it?

A conventional mortgage is one that's not insured or underwritten by the federal government, meaning it excludes FHA and VA loans. 

Advantages of a conventional mortgage:

  • They don't require private mortgage insurance if you're able to put 20 percent down. 
  • Since you're usually required to pay a higher down payment than you would for an FHA loan, you'll build equity faster. 
  • Conventional mortgages are fairly predictable and stable throughout their term, so it's easier to plan for economically. 
  • You can typically get a 15-year mortgage or a 30-year mortgage. 

Disadvantages of a conventional mortgage

  • Since the loan puts the risk on the lender rather than the government, you'll need to meet stricter requirements than you would for a FHA or VA loan. 
  • You’ll need excellent credit to qualify for the best rates, as well as a consistent employment history and reasonable debt to income ratio.
  • Many lenders require higher down payments for conventional loans than they do for government-backed loans.

Is it right for you?

Conventional mortgages are great for people who: 

  • have good credit and a low debt to income ratio
  • can put 20 percent down 
  • don't qualify for more desirable government loans, like a VA loan

Ready to plan for a conventional mortgage? Check out the estimated mortgage rates and then compare mortgage terms with our 15-year vs. 30-year calculator

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