Conventional loans are a popular type of home financing for clients. These mortgages are fully funded and insured through private lenders, and they have some of the most competitive interest rates available in home financing. Conventional loans have flexible terms and rates to suit any borrower’s needs. New Horizon Mortgage Inc, in San Antonio offers the most competitive conventional loan options throughout Travis, Williamson, Bexar, Comal, and Guadalupe counties.
Conventional Loan Basics
Conventional loans differ from non-conventional loans, which are insured through divisions of the federal government. Because they are not regulated through the federal government, conventional loans have more stringent qualifying requirements than non-conventional loans, but they typically have better interest rates, as well. If you’re worried about meeting credit requirements or raising cash for a down payment, you may want to consider non-conventional loans like an FHA, USDA, or VA loan.
Conforming and Non-conforming Conventional Loans
There are two types of conventional loans. Conforming conventional loans conform to loan limits set by government-sponsored entities (GSEs) Fannie Mae and Freddie Mac. These GSEs purchase mortgages in bulk and repackage them for sale on the secondary market. Fannie Mae and Freddie Mac will only purchase loans up to a certain limit to mitigate their risk. Loans that exceed this limit are non-conforming loans.
Conforming limits vary based on the median income in each county. For homes in Bexar county, the limits are:
- $726,000 for a one-unit property
- $929,850 for a two-unit property
- $1,123,900 for a three-unit property
- $1,396,800 for a four-unit property
When you decide to purchase a high-value home, you’ll need a non-conventional, or “jumbo” loan. Lenders keep jumbo loans on their own books, which means they carry more risk in the case of borrower default. Jumbo loans may have more stringent requirements. Clients typically should have a low debt-to-income (DTI) ratio and be able to provide a larger down payment, usually 20-30%. In some cases, non-conforming loans may have higher interest rates than conforming loans. New Horizon Mortgage, Inc. offers competitive rates and options for all types of conventional loans, even jumbo loans.
Conventional Loan Advantages
Because they aren’t backed or regulated by the federal government, conventional loans are flexible and have several advantages to consider:
- Terms from one to 30 years
- Fixed and adjustable interest rates
- Competitive interest rates
- May be used to purchase an existing home, build a new one, or provide renovations
Explore Your Conventional Mortgage Options
When you’re ready to start looking at the different home financing options available to you, contact New Horizon Mortgage, Inc in San Antonio. Whether you’re just learning about conventional loans or are ready to get a quote and begin your search, we can help. We offer conventional loan options throughout Travis, Williamson, Bexar, Comal, Guadalupe and nearby counties.