Loan Products and Programs - Conventional Loan
A conventional loan is a type of mortgage loan that is not insured or guaranteed by the government. Instead, the loan is backed by private lenders, and its insurance is usually paid by the borrower.
Conventional loans are much more common than government-backed financing. In the first quarter of 2018, conventional loans were used for 74% of all new home sales, making them the most popular home financing option—by a long shot.
- (1)Though conventional loans offer buyers more flexibility, they’re also riskier because they’re not insured by the federal government. This also means it can be harder for you to qualify for a conventional loan. But stay tuned; we’ll get to that later.
Conventional Loan Benefits
There’s a reason why conventional loans are so popular. This type of loan has several features that make it a great choice for most people:
- Low interest rates
- Fast loan processing
- Diverse down payment options, starting as low as 3% of the home’s sale price
- Various term lengths on a fixed-rate mortgage, ranging from 10 to 30 years
- Reduced private mortgage insurance (PMI)