- Conventional loans are a wonderful home financing option with negotiable terms and rates to meet all types of unique needs. A conventional mortgage is fully funded and insured by a private lender. Some are starting to offer the most competitive rates in the mortgage industry. You will want to work with a skilled professional at Trinity Mortgage who can guide you through different conventional loan options. If you’re interested in purchasing a home in San Antonio, TX call Trinity Mortgage to get a free, no-obligation quote.
Conventional Loan Essentials and Perks
A conventional loan is a mortgage that is not insured or regulated by a government agency. In contrast, nonconventional loans are insured by agencies such as the Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA), or the U.S. Department of Agriculture (USDA). Since they aren’t secured by the government, conventional loans might pose a higher risk to the lenders who provide them. For this reason, they are very selective about approval requirements. Conventional loans usually require a higher down payment than a nonconventional loan. Despite these issues, conventional loans have some amazing benefits to consider, such as:
- Competitive interest rates, with fixed and adjustable rate options
- Private mortgage insurance is not required with a 20% down payment
- A wide range of terms, from 10-30 years
- No income limits
- Funding for high-value homes is available
Various Types of Conventional Loans
It is important to understand the two main types of conventional mortgages: conforming and nonconforming. Government-sponsored entities (GSEs) like Fannie Mae and Freddie Mac will purchase conventional loans from lenders and repackage them into securities for sale to investors. These GSEs will have a maximum loan limit, which can vary by county across the United States. Nonconforming loans, also known as “jumbo loans,” are mortgages that exceed the GSE limit in a given county and usually stay on lenders’ own books as portfolio loans.
In 2019, all conforming loan limits in Texas were raised. Limits are set annually by the Federal Housing Finance Agency (FHFA) and can be raised for more expensive real estate markets. In San Antonio, the conforming loan limits are:
- $484,350 for a one-unit home
- $620,200 for a two-unit home
- $749,650 for a three-unit home
- $931,600 for a four-unit home
There are important distinctions between conforming and nonconforming conventional loans. Nonconforming loans are higher risk for private lenders than conforming loans. Because of this, they must have a higher down payment requirement (usually 20% or more is required) and more stringent approval requirements.
Starting Out with a Conventional Loan
If you’d like to learn more about conventional loans, contact Trinity Mortgage. We are excited to offer you free advice and help you find your dream home in the San Antonio Texas area.