Conventional mortgage loans are the most popular on the market. For approval purposes, they follow the underwriting guidelines of Fannie Mae and Freddie Mac, the biggest overseer of mortgage financing in the country. Many people believe you must put 20% down, that’s not true. I will say, if you are able to put down 20%, that is preferred. Down payments range from 3% on up. If you plan on putting less than 20% down, you will be charged Private Mortgage Insurance (PMI). There are ways to wrap PMI into your mortgage rate… this is called Lender-Paid Mortgage Insurance (LPMI). Some Lenders try and sell the fact that there is NO PMI, when honestly, it’s built into the rate. A benefit on Conventional Loans is that there is NO Upfront Mortgage Insurance Premium (UFMIP) or Funding Fee. The (3) most popular types of Conventional Loans at NGG MORTGAGE are (in order of popularity): 30-year Fixed, 7-year Adjustable Rate Mortgages (ARMs), 15-year Fixed. Please ask me why I feel the 7-year ARM are the smartest mortgage loans on the market.
Conventional mortgage loans are ideal for borrowers with excellent credit scores, low debt to income ratio, a down payment of 5-20%, and reliable monthly income. A conventional mortgage loan is a type of mortgage in which the underlying terms and conditions meet the funding guidelines of Fannie Mae and Freddie Mac and are not insured by the government. Conventional mortgages may be fixed-rate or adjustable-rate mortgages with a maximum loan limit of $424,100