Published on November 21, 2023
Written by The Servion Group
This is the most common type of mortgage. A conventional loan is simply a loan that is not insured by the federal government. Conventional loans are either “conforming” or “non-conforming.” A loan is conforming if it is less than the limit set by the Federal Housing Financing Agency.
WHO SHOULD GET A CONVENTIONAL LOAN?
Conventional loans are often a good fit for borrowers with strong credit, a stable income and employment history, and a down payment of at least 3 percent.
Jumbo loans are conventional loans that have non-conforming loan limits. For 2022, the maximum conforming loan limit in most of the U.S. is $647,200, so a loan higher than that is considered a jumbo loan. In certain high-cost areas, the ceiling is $970,800. Jumbo loans are more common in higher-cost areas, and generally require more in-depth documentation to qualify.
WHO SHOULD GET A JUMBO LOAN?
Jumbo loans may make sense for people buying in an expensive area or buying a high-end home. Jumbo borrowers should have good to excellent credit, a high income, and a substantial down payment.
There are three government-insured loans: FHA, VA, and USDA. The government does not loan money, but it does offer programs that make it easier for certain people to become homeowners.
WHO SHOULD GET A GOVERNMENT-INSURED LOAN?
These loans may be a good fit if you have low cash savings or less-than-stellar credit and can’t qualify for a conventional loan. You may incur higher overall borrowing costs, such as mandatory mortgage insurance that cannot be canceled, on some loan types.