Real Estate Word of the Day: Conventional Loan
Posted by Tom Crimmins Realty on
Real Estate Word of the Day: Conventional Loan
A conventional loan is a type of mortgage that is not insured or guaranteed by any government agency, such as the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), or the USDA Rural Housing Service. Instead, these loans are backed by private lenders, and their guidelines are established by Fannie Mae and Freddie Mac, the government-sponsored enterprises that buy and guarantee mortgages.
Conventional loans typically require a down payment of at least 3% to 20% of the home's purchase price. A larger down payment can often lead to better loan terms and a lower interest rate. If your down payment is less than 20%, you will typically need to pay for PMI. This insurance protects…
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