The traditional 30-year fixed-rate mortgage is one of the most popular loan programs on the market today. It has a constant interest rate and monthly mortgage payments that never changes. This is a great choice in loan programs for a wide variety of situations. The down payment can go as low as 3% for first-time home buyers and 5% for those who have owned a home in the past. If the down payment is less than 20% Private Mortgage Insurance (PMI) will be required, but will drop off once your loan reaches 80% loan-to-value (LTV). Thankfully conventional loans are flexible in the allowable structure PMI and let you choose to pay wither monthly premiums or a single lump sum payment. Having your PMI structured property could save you hundreds of dollars of the life of your loan.
Conventional loan programs place more weight on a borrowers financial qualifications than government loans do. This means that when applying for a conventional loan you will get a better rate if you have better qualification factors (i.e. higher credit score, significant liquid assets in your bank account, low debt-to-income ratio). Thus this may be the best loan program for you if have good credit score and some money for a down payment.
- Low Monthly payments
- 3% and 5% Down Payments Available
- PMI will cancel once 20% equity is reached
- Heavily dependent on credit and income.
- Potentially higher interest rate than other loan programs.