Chances are that if you’re first-time home buyer, you have heard words like FHA and USDA thrown around. These are examples of government-insured loans. They often have perks like lower credit score cutoffs and down-payment flexibility, but often come with the tradeoff of higher interest rates and mortgage insurance.
With a conventional loan, you as the consumer have much more control over what you will pay over the full term of your loan. While you may have to meet a minimum credit score or put a little more down on your house to qualify (as low as 3% with some conventional products!), conventional loans usually come with the lowest interest rates. Additionally, because the guidelines are a little more strict at the beginning, they usually come with easier processing and fewer hoops to jump through along the way.
Another key advantage to conventional loans is Mortgage Insurance. Unlike with a government loan where you keep it for the life of the loan, with a conventional loan, if you put less than 20% down on a house, once you pay the first 20% off, you can request to have it removed from your monthly payment. This can save you thousands over the life of your loan!
Conventional Loans are the bread and butter of the mortgage industry and if you qualify for both conventional and government backed loans, we can help you evaluate which may be the best option for you!” #craftingfinancialstabiity.
For further reading see:
https://www.experian.com/blogs/ask-experian/what-is-a-conventional-loan/
