HomeBuyer University: Buying a Home, Just Got Easier
Course 3: Loan Type Overview
Conventional Loans - Only 5% Down Payment
There is a misconception that you may not get a conventional loan unless you have significant funds for a down payment. Although FHA loans are popular for home buyers with low down payments, there are certain conventional loan options with down payments as little as 5%.
Conventional Loan Advantages
- Conventional loans have low interest rates.
- Closing costs are typically lower than other loan programs.
- Private Mortgage Insurance (if required) is usually lower than other loan options.
- Overall monthly payments are a little lower than other loan options.
Conventional Loan Disadvantages
You just read in Course 2 how important your DTI is. It is an analysis of recurring debt (existing loans, credit cards, etc.) to monthly gross income, and is used to determine your ability to pay your mortgage. For conventional loans, DTI requirements are less flexible than FHA loans. This can either make it more difficult to qualify for a Conventional mortgage, or you may qualify for a lower loan amount to meet Conventional loan DTI requirements.
All loan programs provide different advantages and disadvantages and differences in closing costs and monthly installments. It is important to consult with your loan officer, compare your options, and pick one that best meets your needs and finances. Speak with your loan officer for detailed and up-to-date information as it can frequently change. For more information on 95% conventional mortgages in CT, contact First World Mortgage Corp. by calling 860-236-LOAN.