For San Antonio home buyers, there's a large mix of low- and no-downpayment mortgages from which to choose. Conventional mortgages are loans underwritten and insured by private lenders and investors instead of mortgages that are government backed like FHA Loans and VA Home Loans.
Conventional loans are "conforming" if they are generally $453,100 or less for a single-family home. Conforming loan limits can be higher in pricier regions of the country. For example, in such states as Alaska and Hawaii, it's $679,650.
A conventional loan is the most common type of mortgage. About 35-50% of mortgages, depending on market conditions and consumer trends are conventional mortgages. They are not insured or guaranteed by the government, thus it's available to anyone meeting the qualification requirements.
There are also established guidelines for borrower credit scores, income requirements and minimum down payments. For example, most conventional loans require somewhere between 5 percent and 20 percent down. Fannie Mae and Freddie Mac offer a 5% down mortgage. The FHA's main product requires just 3.5% down payment. The VA and USDA, qualifying home buyers can buy with no downpayment at all.
Conforming loans means that they meet the stipulations set forth by Fannie Mae and or Freddie Mac. Non Conforming loans will not meet thoes stipulations (such as credit quality, loan-to-value ratio or loan amount).
They can be for a variety of terms ranging from 15 to 40 years, and they can have Fixed Rate or Adjustable Rates. Please visit the Loan Programs page for more information on determining which mortgage would be right for you. Conventional loans with less than 20% down require PMI (Private Mortgage Insurance).
Conventional mortgage rates are typically lower than an FHA Loan. Conventional financing does not require an upfront mortgage insurance premium when a borrower closes on the loan. With FHA financing, that fee for a 30 year loan is 1.75% of the loan amount.
One drawback to FHA loans is that the loan limits set for FHA loans are typically less than the loan limits for conventional financing ($453,100 in San Antonio, Texas). Currently the FHA Loan limit in San Antonio is $359,950. If a borrower is looking for a mortgage that exceeds the FHA loan limits for the area, the borrower would have to put additional money down on the property or finance under a conventional mortgage.
Please visit our FHA page to learn more about FHA loans in Texas
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