These are aka “conforming” or “A-paper” loans, and are typically backed by Fannie Mae or Freddie Mac. They can be a 30 year term, down to a 10 year term, and be a fixed rate or adjustable rate. Here’s why you’d consider a conventional loan:
- Typically the easiest to go through the underwriting and closing process, since these guidelines demand the “best borrowers”. This often gives potential sellers a perception of a “more qualified borrower” in a multiple offer situation, although that’s not always the case.
- Appraisal requirements can be more liberal than the other types of loans require.
- PMI is removeable without refinancing, after 78% equity position is met. If you put 20% or more down on a conventional loan, there is no PMI. We also have no-PMI option for loans with less than 20% down.
