Mortgage Resources

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Conventional Mortgage Loan

Leaman Team | LoanPeople

Conventional LoanConventional mortgage rates are at all-time lows. Freddie Mac began surveying rates in 1971 and today, mortgage rates are still at record-setting low levels. We may see rates rise 1% or more by the end of this year. Keep in mind, the average interest rate in the year 2000 was over 8%, the average for 1990 was over 10%, and the average for 1980 was over 13%. Buying a home this year ensures a historically low interest rate.

Conventional Mortgage Loan – Frequently Asked Questions (FAQ)

What makes a loan a “conventional mortgage”?

Fannie Mae and Freddie Mac determine the guidelines for conventional mortgage loans. These lending entities establish terms and conditions including:

  • Credit Score Minimum Requirements
  • Income Requirements
  • Downpayment Requirements

Conventional mortgage loans have options for fixed mortgage rates and adjustable mortgage rates.

Is there a maximum loan amount for conventional mortgage loans?

Yes, in Texas and almost all states, conventional mortgages have a maximum loan amount of $548,250. In high cost-areas of the nation, such as Alaska and Hawaii, the maximum loan amount is increased. If the loan amount is above these maximums, the mortgage is no longer a conventional loan. Loans greater than the conventional loan maximum are commonly referred to as jumbo loans.

What downpayment is required for a conventional loan in Austin, TX?

In most cases, the downpayment requirement for conventional mortgages is 5% to 20% of the conventional loan amount.

How are conventional mortgages different from FHA loans?

The most significant difference between conventional and FHA loans is that FHA loans are guaranteed by the Federal Housing Administration (FHA). The other big difference is conventional loans have a higher down payment requirement of 5% to 20%, while Austin FHA loans require only 3.5% down payment in most cases.*

Additionally, conventional mortgage loans have stricter down payment guidelines.

In contrast, FHA has more flexible down payment guidelines.

There is no cost to apply for a mortgage loan with Leaman Team. Call now: (512) 710-1400 or email LeamanTeam@LoanPeople.com.

Which mortgage option is better: FHA or Conventional?

The better home financing option depends on your goals, downpayment funds, and credit scores. Typically, borrowers with less money for a down payment prefer FHA loans because only 3.5% downpayment is required in most cases.* If you have less than perfect credit, FHA may be more desirable because the loan program has more flexible guidelines. FHA loans have great rates and Leaman Team | LoanPeople offers low fees. Close on time with great service from application to closing.

Call now: (512) 710-1400 or email LeamanTeam@LoanPeople.com.

Borrowers with money for a downpayment often prefer conventional financing. In most cases, as soon as the conventional mortgage reaches 80% of the sales price, the borrower can remove private mortgage insurance.

In contrast, FHA loans require a non-refundable mortgage insurance premium payment equal to 1.75% up front, .85% annually, prorated monthly of the loan amount. The mortgage insurance must be maintained on FHA loans for the life of the loan.

Both mortgage options are extremely popular.

Leaman Team is available to answer questions and help you determine which financing option is best for you and your family. There is no cost to apply for a loan with Leaman Team | LoanPeople.

Call now: (512) 710-1400 or email LeamanTeam@LoanPeople.com.

Loan Amount: $185,000
Loan Term: 360 Months
Interest Rate: 3.75
Annual Percentage Rate (APR): 3.80