Conventional Loans: Flexible Home Financing
Conventional loans are a great home financing option with flexible terms and rates to meet all types of clients’ unique needs. These mortgages are fully funded and insured by private lenders, and they have some of the most competitive rates in the mortgage industry. Annette Copeland – American Dream Mortgage is a skilled, local mortgage professional who can guide you through different conventional loan options. If you’re interested in purchasing a home in Pueblo, CO, contact American Dream Mortgage with your questions or to get a free, no-obligation quote.
Conventional Loan Basics and Benefits
Conventional loans are not insured or regulated by a government agency. They differ from nonconventional loans, which are insured by various agencies like the Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA), or the U.S. Department of Agriculture (USDA). Because they aren’t secured by the government, conventional loans pose a higher risk to the lenders who fund them. Because of this, they are more selective about approval requirements. Conventional loans also typically require a higher down payment than nonconventional loans. Even with these challenges, VA loans have some amazing benefits to consider, such as:
- Competitive interest rates, with fixed and adjustable rate options
- Private mortgage insurance is not required with a 20% down payment
- A wide range of terms, from 10-30 years
- No income limits
- Funding for high-value homes is available
Conforming and Nonconforming Conventional Loans
There are two main types of conventional mortgages: conforming and nonconforming. Government-sponsored entities (GSEs) Fannie Mae and Freddie Mac purchase some conventional loans from lenders and repackage them into securities for sale to investors. These GSEs (which are different than government agencies like the FHA or USDA) have maximum loan limits, which vary by county across the United States. Nonconforming loans, also called “jumbo loans,” are mortgages that exceed the limit in a given county and stay on lenders’ own books as portfolio loans.
In Pueblo County, CO, the conforming loan limits are:
- $453,100 for a one-unit home
- $580,150 for a two-unit home
- $701,250 for a three-unit home
- $871,450 for a four-unit home
There are a few key differences between conforming and nonconforming conventional loans. Nonconforming loans are riskier for private lenders than conforming loans. Because of this, they have a higher down payment requirement (usually 20% or larger is required) and stricter approval requirements.
Here to Help You Begin This Journey
If you’d like to learn more about conventional loans, contact Annette Copeland – American Dream Mortgage. Annette offers free quotes and is happy to answer any of your questions as you begin on this special journey. If you live in Pueblo, CO, contact us to get started today.