If you have good credit and little debt, yes conventional loans are a great option. They have competitive interest rates and terms and you can cancel your Private Mortgage Insurance (if applicable) once you owe less than 80% of the home’s value. If you don’t have good credit or you have a lot of debt, there are other options available, including FHA loans.ualify for a conventional loan.

It depends. In some cases, yes, but you need good credit and low debt ratios. If you have ‘mediocre’ credit or high debts, you may still qualify, but you won’t get the competitive rates and terms conventional loans offer. In that case, the flexible guidelines of the FHA loan may be a better option.

No, you don’t have to. Can you or should you? Yes, because then you avoid PMI and you start homeownership with a decent amount of equity already. If you don’t have it though, don’t let it stop you from buying a home. Conventional loans allow just 3% down for first-time homebuyers and 5% down for previous homeowners.

Because of the myths that follow FHA loans and other government-backed loans, yes some sellers still prefer conventional loans. This doesn’t mean you can’t buy a home if you don’t have conventional financing as government-backed financing has come a long way. But if you have conventional financing, you may find that more doors open for you.

In reality, it’s hard to qualify for any mortgage. You must prove your creditworthiness and ability to pay the loan back. Whether you apply for a conventional loan, FHA loan, or USDA loan, you need to meet the requirements. Conventional loans have slightly stricter credit score and debt ratio requirements, but they are easy enough to reach for many borrowers.

One way to avoid PMI is to get a piggyback loan or a second mortgage. Conventional lenders want to loan you less than 80% of the home’s value. If you put down some of the down payment and get the rest from a second mortgage, it qualifies to avoid PMI as long as you can afford both the first and second mortgage.

Unlike government-backed loans, no one guarantees conventional loans. That’s why lenders charge PMI, as it protects them should you default on your loan when you owe more than 80% of the home’s value. Conventional lenders follow Fannie Mae and Freddie Mac guidelines so that these entities purchase the loan and free up the lender’s funds, but no one guarantees the loan for them.

No matter where you live in Colorado, the maximum conventional loan limit is $510,400 in 2020. If you need (and qualify for) a higher loan amount, you’ll need a non-conforming JUMBO loan.

No, this is where conventional loans shine. All government-backed loans require you to live in the property or at least one unit (if it’s a multi-unit property). Conventional loans don’t have that requirement. You can use the loan to buy your primary home, a vacation home, or an investment property.

Yes, unlike FHA loans, you don’t pay PMI for the life of the loan. You only pay it until you owe less than 80% of the home’s original value. There are ways to cancel PMI faster too. If you pay the loan balance down faster with extra payments or the home appreciates faster than anticipated, you may request cancelation sooner.

Yes, anyone can lose their preapproval if they aren’t careful. Once you secure a preapproval for conventional financing, do your best to keep everything the same. This includes your credit score, bank account balance, credit card balances, and your job. If anything changes, the lender may revoke your preapproval and/or determine if the new factors still allow approval.

Yes, you can pay your entire PMI premium upfront if you have the cash to do so. This eliminates the extra cost on your mortgage payment but ensures that you pay the full amount of the premium. If you could cancel PMI before the predetermined date, you may pay more for lump-sum PMI than you would if you pay it monthly.