Conventional Loans

A conventional loan is a mortgage that is not guaranteed or insured by any government agency, including the Federal Housing Administration (FHA), the Farmers Home Administration (FmHA) and the Department of Veterans Affairs (VA). It is typically fixed in its terms and rate.

These loans adhere to Fannie Mae guidelines. Fannie Mae, or Federal National Mortgage Association, is a corporation created by the federal government that buys and sells conventional mortgages. It sets the maximum loan amount and requirements for borrowers.

A conventional loan is usually a 30-year fixed rate mortgage. That means it has a fixed interest rate for the 30 year term of the loan. Conventional loans also generally require at least a 20 percent down payment. For instance, if a house costs $200,000, the lender would provide a loan for 80 percent of that amount. Therefore, $160,000 is financed through the lender and the borrower must pay $40,000 cash.

Conventional loans can have better interest rates than non-conventional loans and can be a great option for those with a 20 percent down payment. However, even if the borrower does not have a 20 percent down payment, it is still possible to get a mortgage. By putting less down and accepting a possibly higher interest rate, the borrower can still get financing through a non-conventional loan.

Please call us today at (904)307-0077 to answer any questions you may have.