If you are planning to borrow $424,100 or less for a single-family home, you should be looking into a conforming conventional loan. A conventional mortgage refers to any loan that is not insured or guaranteed by the federal government, as opposed to loans backed by the government, such as FHA (Federal Housing Authority) loans, VA (Veterans Administration) loans, and USDA (U.S. Department of Agriculture) loans. Conventional mortgages typically have a slightly higher down payment than government; however, this loan option normally provides more flexibility with fewer restrictions.
- Lower interest rates for borrowers with good credit
- Flexible mortgage insurance options
- Fewer penalties and fees
- Flexible loan terms
Conventional home mortgage loans have either fixed or adjustable rates. A fixed-rate mortgage means that your monthly mortgage payment remains the same for the life of the loan, and typically has a term of 15 or 30 years. A shorter-term loan can often denote a lower interest rate. An adjustable-rate mortgage, or ARM, fluctuates in relation to market index; therefore, monthly payments can increase or decrease accordingly.