Are you planning to buy a home in Florida but don't have enough cash on hand? A conventional loan might be the solution for you. In this blog post, we'll go over the basics of conventional loans to help you make an informed decision.
What's a Conventional Loan?
A conventional loan is a mortgage that is not insured or guaranteed by the federal government. Instead, conventional loans are backed by private lenders, such as banks or credit unions. These loans typically require a higher credit score and a larger down payment than government-backed loans, such as FHA or VA loans.
Types of Conventional Loans
There are two types of conventional loans: conforming and non-conforming. Conforming loans follow the guidelines set by Fannie Mae and Freddie Mac, two government-sponsored entities that purchase and securitize mortgages. Non-conforming loans, also known as jumbo loans, exceed the loan limits set by Fannie Mae and Freddie Mac.
Benefits of Conventional Loans
One of the biggest advantages of a conventional loan is the flexibility it offers. Conventional loans can be used to purchase primary residences, second homes, and investment properties. They also come with more options in terms of loan terms and repayment schedules.
Another advantage is that once you have built enough equity in your home, you can cancel your private mortgage insurance (PMI). With other types of loans, such as FHA loans, PMI is required for the life of the loan.
How to Qualify for a Conventional Loan
Everyone's situation is different. But don't worry, we're here to find the best solution for you.
If you're considering a conventional loan, keep in mind that you'll need a credit score of at least 620 and a down payment of at least 3%. However, a higher credit score and a larger down payment can result in better loan terms and lower interest rates. We'll also need to see proof of income and employment.
We hope this blog post has given you a good overview of conventional loans. But if you have any more questions or want to apply for a loan, give us a call or drop by our office. We're here to help!