Conventional loans are not government backed and can exceed the loan limit set by Federal Housing Administration (FHA). Conventional loans provide a more considerable amount of flexibility as some types of conventional loans can be secured even when you have a low credit score.
Let’s first look at the types of conventional loans:
- Jumbo loans
- Conforming loans
- Non-conforming loans
- Subprime loans
- Portfolio loans
Conventional loans are not guaranteed by any government agencies, e.g., FHA, Dept. Of Veteran Affairs (VA), Farmers Home Administration (FmHA), etc. However, the “conforming loans” come under the radar of government-sponsored agencies (GSEs) and have to adhere to the parameters set by Fannie Mae and Freddie Mac. Almost half of the conventional loans are conforming loans in which GSEs buy mortgages from lenders and sell them to investors.
Their sole purpose is to make the conventional loans widely available to the general masses.
The loans that do not abide by the GSE guidelines are known as “non-conforming loans” and among them, if your loan does exceed the limit set by GSE, then it will be termed as “Jumbo loan.”
Sometimes, an individual may or may not have the liquid cash for the mortgage settlement amount; now, it’s entirely up to their lender whether he/she accepts the investment in stocks or bonds as a security measure. These loans are called “portfolio loans,” and their terms and conditions are set by lenders only! You would not qualify for such payment methods, elsewhere!
The last type of conventional loans is “subprime loans” in which the lenders may comply with your requirements despite looking at your miserable credit score. Naturally, they come with high-interest rates and fees because of the substantial risk involvement.
Now, if you are looking for a loan that satisfies all your needs without much formalities, conventional loans can easily leave its competitors far behind in that area.
Lastly, let’s put down the benefits of conventional loans (all types) in bullet points.
- Exceeds loan limit set by GSEs
- Can be availed despite low credit score
- Mortgages can be paid as bond or stocks investment which doesn’t qualify as payment method elsewhere, etc.
Don’t wait anymore, avail the conventional loan facilities right at your disposal! Call today 702-278-5000 and let me assist you further.