WHAT IS A CONVENTIONAL LOAN?
A conventional loan is a type of mortgage loan, which a government doesn’t guarantee or insure, it is backed by Fannie Mae and Freddie Mac whom are the entities that insurance most of the loan. Then the borrower also pays for private mortgage insurance (PMI).
These loans are more popular than government‐backed financing because these are more flexible for buyers. At the same time, they are riskier too, since the federal government does not insure them. It is not that easy to qualify for them as they seek higher credit scores and other lending requirements.
Applying for a Conventional Mortgage in Las Vegas can be daunting. There are multiple forms that must be filled out correctly and the language describing which documents are needed can be very confusing. You need a Qualified Las Vegas Mortgage Broker advocating for your needs and helping you understand how to apply and qualify for a home loan in Nevada.
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How Can An Experienced Mortgage Broker Help?
An experienced mortgage broker can make the home loan process much easier for you since they are working for you to match your loan needs and credit worthiness up with lenders who will loan on the kind of property you are looking to buy. Mortgage brokers act as a go between, interpreting the paperwork and will help with completing the many forms required in a mortgage application.
A mortgage broker also “shops” your loan requirements along with your personal financial information to the various lenders they work with whom they know make loans to individuals with similar needs to yours and on properties like what you are looking to buy. A good mortgage broker that provides residential mortgage services in Las Vegas and the surrounding areas of southern Nevada can make getting a mortgage not only easier, but in many cases a reality.
PIF Lending gives you excellent service AND an excellent rate vs using retail banks where you “might” get good service, but you won’t get the rate a qualified mortgage broker can help you obtain.
Conventional loans in Nevada have advantages. They offer a wider range of options for the type of mortgage, down payment amount and lengths of time the mortgage may be written for. They also have different stipulations regarding home inspections and acceptable minimum standards. They can be written for vacation property, investment properties and even some higher risk types of property such as those requiring repairs or extensive remodeling.
Jumbo or large loans are also available through conventional mortgages, and often are not through some of the federally mandated programs.
Conventional Loan Considerations
As mentioned above a Conventional mortgage can be incredibly flexible for buyers as it allows for purchasing power than the government‐ backed financing don’t allow for. Here is are the reasons why you would see to purchase a home using a Conventional Mortgage.
Credit score is over 700 or higher.
Avoiding fees that the federally backed home loans charge that conventional loans do not.
Looking to have your mortgage insurance drop off your home loan, where federally back homed loans do not.
Purchasing a property over $355,000
Looking for a 1st time buyer program that only requires 3% down known as Home Ready or Home Possible.
Putting 20% down instead of minimum down as this will get rid of the private mortgage insurance (PMI) requirement.
Looking to not include your husband or wife’s debts in consideration for the home loan.
Allows for more flexibility for student loans and allows borrowers to qualify for a home loan with student loans MUCH easier.
Needing to use variable income such as bonus, overtime , commissions, tips, per diem etc.
Looking to exclude debts that will soon be paid off.
Looking to purchase a condominium.
Looking to purchase a home as a secondary residence that is not a primary residence.
Looking to purchase and investment residence that is not a primary residence.
Just as anything in life, there just isn’t a one size fits all when it comes to a Conventional Mortgage. Applying for a Conventional Mortgage in Las Vegas can be daunting. Using a Qualified Las Vegas Mortgage Broker advocating for your needs and helping you understand how to apply and qualify for a conventional home loan in Nevada.
Conventional mortgages in Nevada are different than VA – Veteran’s Administration, FHA – Federal Housing Administration, or FmHA – Farm Home Administration loans. Freddie Mac or Fannie Mae typically underwrites conventional loans in Las Vegas, two federally monitored programs that are secondary real estate loan markets. Both help people get into their own home with lower down payments.
Conventional mortgages are also a good option for someone looking to refinance a home with equity in the property. A mortgage broker most often will bring several different loan packages to you for consideration. They may or may not require mortgage insurance, there may be different down payment percentage requirements, and they can work with a range of FICO scores.
PIF Lending – your mortgage broker Las Vegas– will share any other stipulations you need to know about when they explain the loan package options to you.
Frequently asked questions about conventional loans
Everyone dreams of having their own house, but not many are able to buy it at the right time. With so many mortgage options available on the market, it is easy to get confused and drop the idea of buying a house. If you have scoured the web, then you might have stumbled upon this term ‘conventional loan’, which is one of the most popular mortgage loans available on the market. Let’s delve into the details of this particular type of loan and it fares against other loan options.
What is the difference between conventional loans and the ones backed by the government?
Government-backed loans include the Federal Housing Administration (FHA) Loans, whereas conventional loans include Veterans Administrations (VA) Loans. With an FHA loan, you will have to put a minimum of 3.5% down along with paying MIP, which is a mortgage insurance premium as a part of your monthly payment. If you default on the loan, then the FHA uses the money from the MIP to pay the lenders.
As far as a VA loan is concerned, you or your spouse must be a current or former member of the US Armed Forces or National Guard. There is no down payment for you to pay, but there is a one-time funding fee, which ranges from 1-3 percent of the total loan amount. In this type of loan, if you default, then the lender is at risk, and the money will be extracted from you by selling your house through a short sale process of foreclosure. As there is an added risk to the lender, you will have to pay private mortgage insurance (PMI) on the conventional loan if you submit less than 20% down.
Do conventional loans have types? If yes, what are they?
Well yes, conventional loans have two types, conforming and non-conforming.
Conforming Conventional Loan
To qualify for this particular type of conventional loan, you must meet the requirements set by Fannie Mae and Freddie Mac, which expand to ‘Federal National Mortgage Association’ and ‘Federal Home Loan Mortgage Corporation’. Both are government-sponsored organizations that buy mortgages from lenders.
Nonconforming Conventional Loan
If the conventional loans exceed the loan limit, then those are called non-conforming conventional loans. Such loans are not bought by Fannie Mae or Freddie Mac, as they don’t meet the guidelines, so they are funded by lenders or private companies.
How to qualify for a conventional loan?
The first thing that you need to do to qualify for a conventional loan is to sit down with a lender. Provide all the things that your lender asks for such as, tax returns, pay stubs, bank statements, and so on. They ask for these things to be sure that you have a steady income and you can pay the monthly mortgage payments on time. You will also be required to pay a down payment of 3% to qualify for the conventional loan, but it is better to pay as much down payment as you can because that will make your monthly instalments easy to arrange.
Advantages of a conventional loan
1. Fast loan processing.
2. Low-interest rates.
3. Flexible down payment options, starting as low as 3 percent.
4. Different term lengths on a fixed-rate mortgage, starting from 10 years and going all the way up to 30 years.
If you still have doubts in your mind, but also want to apply a loan to buy a house, then you should consult PIF Lending because they are helping people buy their first home in a stress-free manner. Just get in touch with one of their experts and get all the information on what you need to do before, during, and after applying for the conventional loan.