Conventional Loans
Conventional loans are more than just a means to finance your home—they are the key to realizing your dreams. As the most popular mortgage option in the U.S., they offer stability and flexibility, paving the way for you to create lasting memories in a place you can truly call home. A Midwest BankCentre Mortgage Officer is here to support you every step of the way on your journey toward homeownership.
What is a Conventional Loan?
A conventional loan is a type of mortgage that is not insured or guaranteed by the government. It typically requires a higher credit score and down payment than government-backed loans, but offers more loan options and flexible loan terms.
A low down payment conventional mortgage loan is available with highly competitive rates and a simple approval process. The Mortgage Loan Officers at Midwest BankCentre will clearly explain your options and help you choose the right loan type for your unique financial situation.
Loan Rates and Terms
Rates are effective as of 12/21/2024
TYPE
RATE
APR
6.375%
6.496%
6.875%
6.953%
Conforming Vs. Nonconforming Conventional Loans
Conventional loans are often divided into two categories: conforming loans and nonconforming loans. Here’s what you need to know about each type:
Conforming Loans
Conforming loans meet the loan limits set by the Federal Housing Finance Agency (FHFA). The FHFA sets these limits annually based on median home prices in a particular area. In 2024, the conforming loan limit is $766,550 for most parts of the United States.
Advantages of Conforming Loans :
- Lower interest rates compared to a nonconforming loan
- Easier to qualify for than a nonconforming loan
- Opportunity to not pay private mortgage insurance (PMI) once you have 20% equity in your home
Nonconforming Loan
Nonconforming loans are conventional home loans that do not meet the loan limits set by the FHFA. These loans are often referred to as jumbo loans and are used for higher-priced properties. Nonconforming loans typically have stricter underwriting requirements than conforming loans and may require a larger down payment and a higher credit score.
Advantages of Nonconforming Loans:
- May allow a borrower to finance higher-priced properties that exceed the conforming loan limit
- Products available with less than 20% down making them even more obtainable
Types of Conventional Loans
There are many different types of conventional loans available to qualified borrowers. Whether you’re looking for a conforming loan or nonconforming loan, a fixed-rate mortgage or adjustable-rate mortgage, there is likely a conventional mortgage loan option that is right for you. Contact a loan officer at Midwest BankCentre to learn more about your loan options and find the right loan for your unique financial situation.
Adjustable-Rate Mortgages (ARM)
These are a type of conventional home loan that have an up-front fixed-rate period longer than one year, typically between five and 10 years, and may start with a lower interest rate than fixed-rate mortgages. During this time, the interest rate and monthly payments are even lower than a fixed-rate mortgage. However, after the initial period, your rate can change or adjust, usually higher, along with your monthly payments. Adjustable mortgage rates are ideal for people who don’t plan on staying in their home past the time when the interest rate will change, usually after 5-, 7- or 10-year loan term.
Fixed-Rate Mortgages
These are conventional home loans with an interest rate that remains the same for the entire term of the loan. This provides borrowers with stability and predictability in their monthly mortgage payment.
Advantages of Conventional Loans from Midwest BankCentre include:
Competitive Interest Rates
Conventional loans often offer lower interest rates. This can save you money over the life of your mortgage loan.
No Mortgage Insurance with 20% Down Payment
If you put down 20% or more on your home, you can avoid paying private mortgage insurance (PMI), which is typically required with smaller down payments. Some FHA loans require mortgage insurance for the life of the loan regardless of down payment or equity.
Flexible Loan Terms
A conventional home loan can offer a variety of loan terms, from 10 to 30 years, allowing you to choose the term that best fits your budget and financial goals.
More Loan Options
Conventional loans offer more loan options than government-backed loans.
No Up-front Funding Fee
Unlike government-backed loans, conventional loans do not have an up-front funding fee, which can save you money at closing.
Investment Property Financing
Conventional loans can also be used to finance investment properties, making them a great choice for real estate investors.
FAQs
Our FAQs cover important topics such as credit score requirements, down payments, loan limits, and more. If you have additional questions or need personalized guidance, our mortgage specialists are here to assist you.
What credit score is required to qualify for a conventional loan?
To qualify for a conventional loan, a credit score of at least 620 is generally required. However, higher scores (typically 700 or above) improve your chances of securing better interest rates and terms. Specific requirements vary by lender.
Who is a good candidate for a conventional loan?
A good candidate for a conventional loan is someone with a strong credit score (typically 620 or higher), a stable income, and the ability to make a larger down payment, often 3-5% or more. They may prefer flexible loan terms and want to avoid mortgage insurance.
What are the typical closing costs for a conventional loan?
Typical closing costs for a conventional loan include application fees, appraisal fees, title insurance, loan origination fees, and various administrative charges. These generally range from 2% to 5% of the loan amount, depending on the lender and location.
Can conventional loans be used for refinancing?
Yes, conventional loans can be used for refinancing. They allow you to replace your existing mortgage with a new one, often to secure a better interest rate, shorten the loan term, or access home equity.
Apply for a Conventional Loan today.
Buying a home is one of the largest investments you will make during your lifetime. When you apply for a St. Louis conventional loan, you want to partner with a mortgage banker you can trust. With 16 branch locations conveniently located throughout the St. Louis region, our lenders are uniquely familiar with the local housing market and will help you make the best financial decision for you and your family.