New American Funding Offers Conventional Loans for Austin
What is a conventional mortgage loan?
Conventional mortgage loans are a class of loans in which the fundamental terms and conditions meet the financing measures of government organizations Fannie Mae and Freddie Mac. The terms hold income requirements, credit score guidelines and down-payment stipulations.
Contingent upon current market conditions and consumer trends, roughly 35-50% of all mortgages are conventional mortgages. These mortgages can have either a fixed or adjustable-rate and require a down payment amount ranging anywhere from 5 to 20% of the total loan amount.
Does New American Funding offer different types of conventional mortgages?
Many types of conventional mortgages are provided by New American Funding to qualified borrowers across the Nation. New American Funding customers are offered conventional loans with fixed-rates as well as adjustable-rates. Most states provide loan quantities up to $417,000, however, the maximum for Alaska and Hawaii has increased to $625,000. According to New American Funding, any loan higher than the mortgages stated previously fall under the category of Jumbo Loans.
How do Conventional mortgages and FHA loans differ?
Whether you select a conventional mortgage or an FHA loan, you will still borrow money from a lending institution but there are a few differences between the two as listed below.
- All FHA loans are guaranteed by the Federal Housing Administration
- Conventional mortgages generally have a 5% minimum down payment, while FHA loans can be obtained with a down payment as low as 3.5%
- Under FHA loans, qualified borrowers are allowed to obtain 100% of the funds used for their down payment from a down-payment assistance program, relative or government agency
- If 20% or more is put down by the qualified borrower, the whole down payment can come from a relative but if less than 20% is put down, then a minimum of 5% of the down payment must come from the borrowers own personal funds.
What are the benefits of using a conventional loan as opposed to an FHA loan?
For starters, if obtaining an FHA loan, borrowers are required to pay a nonrefundable premium equivalent to 1% of the complete loans amount and a monthly payment toward their mortgage insurance. Unless the borrower’s loan amount has reached 80%, they must maintain their mortgage insurance for the greater of 5 years.
With that said, conventional loans are extremely appealing to qualified borrowers who also have the required funds for a down payment. As soon as the borrower’s loan amount has reached 80% of the sales price, the burden of mortgage insurance may be lifted.
Contact a New American Funding Loan Officer today for further information or with any questions you have concerning the loan process. To reach New American Funding Austin-Round Rock, use the contact form on this page.