Conventional Loans Houston

What is a Conventional Loan?

Some home loans are insured by government agencies to protect lenders against default. Those that are not are called conventional loans.

Since lenders are taking greater risk with these loans they normally require down payments of 20% or more.

Is a Conventional Loan Good For Me?

Conventional loans are good options for homeowners with savings and good credit scores because they generally offer lower interest rates. If you are looking to purchase an investment property or just a second home, conventional lending is your way to get there.

What Are The Benefits of a Conventional Loan?

Government programs offer alot of benefits but they also add a layer of regulation. Those benefits are great but the regulations may limit your options. That's where the big benefit of conventional loans comes in, flexibility. That flexibility allows this type of loan to be used in a variety of situations. Essentially when you purchase anything but your primary property you're going with conventional financing.

That flexibility also expands to the programs being offered. Conventional loans can have down payments as low as 3%. But with these programs there are benefits to paying a little more up front if you can afford it.

The big reason this works is a little different for government loans. This has to do with mortgage insurance. Basically, increasing that down payment with conventional loans can make a big difference on your payment. All of this hinges on one fact element, conventional loans are very credit score dependent. The mortgage insurance and rate vary alot between low and high credit scores. If a borrower has a lower credit score, conventional loans are almost always going to cost more than the government loan. However, if the borrower has a great credit score it is definitely something to consider.

In summary conventional loans are the only way to get investment properties or second homes and they work best for borrowers with money to put down and great credit scores.

For more information on other types of home loans you can:

Check out our FHA Loan, USDA Loan, or VA Loan options here.