Conventional Purchase Loan
A conventional loan is the most common type of mortgage. It’s available with a fixed rate or an adjustable rate.
What Is a Conventional Loan?
A conventional loan is a mortgage that isn’t insured or guaranteed by a government agency. Most conventional loans follow guidelines set by Fannie Mae and Freddie Mac.
A conventional loan is often a good fit if:
- You have good credit and a steady income.
- You can make a down payment. The more you put down, the less you borrow.
- You’re buying a primary home, a second home or an investment property.
Fixed Rate or Adjustable Rate
Fixed Rate
- Do you want the same principal and interest payment for the life of your loan, even if market rates change?
- Do you plan to stay in your home for a long time?
Adjustable Rate
- Planning to stay in your home about five years or less? An adjustable-rate loan can give you lower initial payments. After the initial fixed-rate period, the rate and payment can go up or down.
Fixed rate vs. adjustable rate over time
- Fixed rate
- Adjustable rate
Interest rate
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Mortgage Insurance
If you put down less than 20%, a conventional loan usually requires private mortgage insurance (PMI), which protects the lender if a loan isn’t repaid. Unlike FHA mortgage insurance, PMI can be removed once you’ve built enough equity in your home.
Ready to talk about your loan?
Call a Verity Loans loan officer. We’ll walk you through your options and answer your questions.