What is a Conventional Loan?

A conventional loan is a mortgage that is funded by private lenders such as banks, credit unions, and mortgage companies. It is a type of loan that is not insured or guaranteed by the government. In other words, the lender assumes the risk of the loan instead of the government. A conventional loan can be used to purchase or refinance a home or investment property.

Who is Eligible for a Conventional Loan?

To be eligible for a conventional loan, you will need to meet certain criteria such as having good credit, a stable income, and a low debt-to-income ratio.

What are the Benefits of a Conventional Loan?

One of the main benefits of a conventional loan is that it allows you to borrow more money than government-backed loans. This is because there are no limits on the loan amount, unlike FHA loans, which have maximum loan limits based on the area you live in. Mortgage insurance is not mandatory with conventional loans if you put down at least 20% of the purchase price.

What are the different types of Conventional Loans?

The most common type of conventional loan is a fixed-rate mortgage, which offers stable monthly payments over a set interest rate for the life of the loan. Another option is an adjustable-rate mortgage, which offers lower initial interest rates that can adjust up or down over time. Many borrowers also choose to take advantage of jumbo loans, which are designed for higher-priced homes that exceed the conforming loan limits of a traditional mortgage.

If you have any additional questions, be sure to contact Capital South Funding LLC to see if a conventional loan is the right choice for you.