A conventional mortgage is a home loan that is not insured by a government agency such as FHA, VA, or USDA. Many conventional loans follow guidelines established by Fannie Mae or Freddie Mac.
Conventional financing can offer flexibility in loan terms, property types, and mortgage insurance options. Some qualified homebuyers may be eligible for conventional financing with as little as 3% down - you don't necessarily need 20%.
But conventional isn't automatically the right choice for everyone. Your credit, down payment, income, property and long term goals all matter when comparing mortgage programs.
You don't necessarily need 20% down to buy a home with a Conventional Mortgage.
Some qualified homebuyers may be eligible for conventional financing with as little as 3% down. Other transactions may require 5%, 10%, 20% or more, depending on the loan program, occupancy, and other property type.
For example, on a $200,000 home:
3% down: $6000
5% down: $10,000
10% down: $20,000
20% down: $40,000
These amounts represent down payment only. Closing costs, prepaid expenses, and other transaction costs may also apply.
At @Home Mortgage, we help you understand the complete picture, not just the minimum down payment.
If you put less than 20% down on a conventional mortgage, you will generally need Private Mortgage Insurance (PMI).
PMI protects the lender, but it can help make homeownership possible without waiting until you've saved a 20% down payment.
The PMI varies based on factors such as your credit score, down payment, and loan details. Unlike FHA mortgage insurance, conventional PMI may be eligible for cancellation once you meet certain equity and loan requirements.
At @Home Mortgage, we compare your estimated payment, mortgage insurance, and cash needed to close so you can understand the full cost of your financing options.
Conventional financing may be available for a variety of property types, including single-family homes, eligible manufactured homes, condominiums, and certain 2-4 unit properties.
Depending on the loan program and qualification requirements, conventional mortgages may be used to finance a primary residence, second home, or investment property.
At @Home Mortgage, we take time to understand your goals, explain conventional financing options and help you feel prepared - not just preapproved - before you purchase your Michigan home.
Conventional mortgages may be available with either a fixed or adjustable interest rate, depending on the loan program. With a fixed-rate mortgage, the interest rate remains the same for the life of the loan, which means the principal and interest portion of your monthly payment remains consistent.
Adjustable-rate mortgages (ARMs) typically have an initial rate period followed by scheduled rate adjustments. At @Home Mortgage, we can help you compare available options and determine which structure fits your homebuying plans.
Many conventional mortgages follow guidelines established by Fannie Mae or Freddie Mac. Unlike FHA, VA, and USDA loans, conventional loans are not insured or guaranteed by a federal government agency.
The specific conventional loan program that may work for you depends on factors such as your credit, income, down payment, property type, and overall financial picture. We can help you compare your options and understand which program may fit your goals.
