Conventional Loans

Conventional loans are mortgage loans that are not government-insured or guaranteed. This type of loan is backed by private lenders and the borrower has to pay for its insurance. Still, these loans are much more popular than government-backed loans.

Conventional loans provide you a greater amount of flexibility, but they come with higher risks. The simple reason is that they aren’t backed by the federal government. They can be more difficult to qualify for. Still, they have a larger market share and we at Mid-Atlantic Commercial Capital, LLC can guide you in applying for these loans.

Types of Conventional Loans

There are two main categories of conventional loans. The differences between the two are as follows:

Conforming Loans

A conventional loan is classified as a conforming loan if it meets the rules set by the following two organizations:

• Federal National Mortgage Association
• Federal Home Loan Mortgage Corporation

These are government-sponsored organizations that buy mortgages from lenders. The loan limit is the most important rule for conforming conventional loans. The baseline loan limit is currently set at $510,400. This is the limit on the maximum loan amount that can be borrowed and is adjusted every year. The limit is set differently for high-cost areas, Hawaii, and Alaska, which is currently $765,600.

Nonconforming Loans

There are conventional loans that exceed the baseline. These loans are referred to as non-conforming conventional loans.

• These loans are also called jumbo loans
• The above-mentioned organizations do not purchase these loans, as they don’t meet the loan amount conditions
• These loans are backed by private lenders or institutions

Advantages of Conventional Loans

The benefits of different types of conventional loans are that each one is designed for different kinds of borrowers. This is where our team of experienced loan experts can help you make the right choice. We can assess your profile and needs and guide you in selecting the loan program that addresses your goals.

The most important benefits of applying for conventional loans are as follows:

i. Lower Interest Rates

If you have a high credit score, you can get a lower interest rate on conventional loans. The interest rate for this loan is linked with the borrower’s credit score, unlike many government-backed loans. A low-down-payment may require you to pay for private mortgage insurance, but this requirement can be done away with once your LTV ratio touches 80%. This is no possible with government-backed loans like FHA loans.

ii. Apply for High Loan Amounts

Non-conforming loans do not have limits on how much loan amounts you can apply for. It is a level of flexibility that can help you cover larger projects. Government-insured loans may not be able to provide that level of flexibility.

iii. Flexible Terms

More flexible terms can be availed with conventional loans because they are offered by private lenders. They are not bound by the rules set by government agencies. You can seek more flexibility with the down payment or the duration of the loan term. There may also be options if your credit doesn’t meet the minimum requirements for government-backed loans. We can help you get the best terms based on your requirements.

We at Mid-Atlantic Commercial Capital, LLC, have a vast network of reputed and approved lenders. We can assist you in getting conventional loans on the best terms. Feel free to reach us today at (540) 825-9800. You can also write to us at ckearns@maccllc.com and we will be pleased to reach you back at the earliest.