Conventional Loans are the most common of all loans. These loans are typically sold to Fannie Mae or Freddie Mac. They do not come with a government guarantee and require a down payment. For down payments that are less than 20% of the purchase price, mortgage insurance is required. They can be used to purchase a primary residence, second home, or investment property.
All Conventional Loans require a down payment. Almost all of them require a down payment of 5%. If the down payment is less than 20% then the borrower is required to pay mortgage insurance. The mortgage insurance is usually paid monthly and insures the lender is made whole in the event of a default by the borrower. Conventional loans require a minimum credit score of 620 with a 20% down payment or a credit score of 680 with less than 20% down.
Conventional loans are a good fit for borrowers who are well quailed and have enough savings to put 20% down. They are the only loan type that allows borrowers to purchase a second home or investment property.
A Conventional loan has the same closing cost as any other loan. If a homebuyer does not have at least 20% to put down on the purchase, mortgage insurance will be required.
Conventional loans are a good option for homebuyers with excellent credit, a small amount or no debt, and enough savings for a 20% down payment. Without a 20% down payment, private mortgage insurance is required for all conventional loans. A credit score of 620 is required with a 20% down payment. A credit score of 680 is required less than 20% down payment. Conventional loans can be used to purchase a second home or investment property.
Our goal at Security America Mortgage is to match the best product to the needs of our clients.