Conventional Loans for Colorado Home Buyers
Known as the standard in loan programs, conventional loans are flexible loan programs that aren’t federally guaranteed. Conventional loans are one of the most popular programs in Colorado and make a great options for buyers with the standard down payment plan.
What is a Conventional Loan?
A conventional mortgage is a type of home loan that is not guaranteed or insured by a government agency. Conventional loans often meet the down payment and income requirements set by Fannie Mae and Freddie Mac and conform to the loan limits set by the Federal Housing Finance Agency (FHFA). Because they are not federally guaranteed, borrowers who make a down payment of less than 20% will be required to pay private mortgage insurance.
Advantages of Conventional Loans
Conventional loans are more flexible than many other types of mortgage loans. Depending on your situation, they can offer lower interest rates, a variety of down payment options, and different choices for terms. While a 20% down payment is ideal, conventional loans offer options to put as little as 3% down. If your down payment is less than 20%, you’ll need to pay private mortgage insurance. Once the principal balance on the loan hits approximately 20% equity in the property, PMI can be canceled. In contrast, mortgage insurance payments on FHA loans can last for the life of the loan.
Who Qualifies for a Conventional Loan?
Conventional home loans are a great option for many people, especially those with a strong credit history and steady income. Requirements will depend on your credit and financial history. Lenders will look at your credit score, debt-to-income ratio, income, and cash reserves to determine if you qualify.
Get Started on Your Colorado Conventional Loan
Get in touch with a mortgage expert who can help you find the right loan options for your situation.