For the first-time homebuyer, grasping the difference between a conventional mortgage and a non-conventional mortgage is going to be important. Since many lenders, including The Federal Savings Bank, offer both kinds of mortgages (conventional and non-conventional), it’s a good idea to know the difference when you start out. Once you know if you should be looking for a conventional mortgage, you’ll be ready to take the next steps on your homebuying journey.
According to Investopedia, conventional mortgages include any loan that is “not offered or secured by a government agency,” such as the Fair Housing Administration (FHA) or the Department of Veterans Affairs (VA). If you seek a conventional mortgage for your home loan, you may expect credit score requirements to be higher than with non-conventional mortgages. You might also be subject to a higher interest rate on your conventional mortgage than with some government-backed mortgages; or be required to pay private mortgage insurance.
So when is a conventional mortgage the more convenient option? Your loan officer can help you determine the best plan of action for your long-term financial health. Maybe you have worked hard to rebuild your credit and have saved up enough for a 20% down payment – a conventional loan might be a great option for a low monthly payment. Or maybe you already have a VA loan on your primary residence– in this instance, you will likely seek out a conventional mortgage if you purchase a second home, or an investment property to flip or rent since government-backed mortgages are often intended for the purchase of a primary residence.
When you apply for a mortgage at The Federal Savings Bank, we will use the information listed on your application to assess what sort of mortgage you might qualify for. This information includes income, assets, and existing debt, as well as a credit pull. Your loan officer will help you determine a rate and term for your mortgage, and search for a monthly payment that fits your family’s needs/budget.
Whether or not you wind up deciding on a conventional loan for your mortgage needs, at The Federal Savings Bank we are invested in making sure prospective homeowners have the knowledge they need to make informed decisions. That’s why we offer a free Learning Center online. But there’s no substitute for real-time access to an experienced loan officer– contact us today to get in touch with a member of our world-class team, and take the next step on your homebuying journey.
Subject to credit approval. Terms and conditions may apply. Subject to VA eligibility requirements. Property insurance is required on all loans secured by property.