Conventional Loans: The Possibilities are Endless
Conventional loans are a popular financing option among many types of would-be homeowners. These privately insured, privately funded mortgages can be customized to your unique needs as a borrower. Bell Financial Group is a team of local, trusted mortgage experts with the financing power of national lenders coupled with the one-on-one attention you need during this important part of your life. If you live in Boise, Pocatello, Blackfoot, Idaho Falls, Rigby, Rexburg, or surrounding Idaho neighborhoods, contact us to schedule a consultation. We’ll evaluate your finances and goals and suggest the best-suited conventional loan options for you.
What Makes a Loan “Conventional”?
A conventional loan is one of two main divisions of mortgages, the other of which is a nonconventional loan. While conventional loans are fully funded and insured through private lenders and companies, nonconventional loans are guaranteed, and sometimes funded in part, through government agencies. Because they are not subject to the same level of government regulation as nonconventional loans, conventional loans have many advantages to consider:
- Flexible term lengths, from a year to 30 years
- Fixed and adjustable interest rates available
- Competitive interest rates
- Usable for purchase, new construction, renovations, refinancing, and more
It’s important to note that conventional loans may have more stringent qualifying requirements than nonconventional loans, because they pose more of a risk to lenders. To get approved for this type of loan, you’ll need to show your financial worthiness, have a decent credit score, and be prepared to supply a down payment. Many of our nonconventional borrowers, in fact, choose to refinance to conventional loans after a few years with a nonconventional loan. Doing so can help borrowers save month-over-month when compared with nonconventional interest rates.
What Makes a Mortgage “Conforming”?
Conventional loans are further divided into conforming and nonconforming mortgages. Conforming loans are purchased and repackaged for sale on the secondary market by mortgage giants and government-sponsored entities (GSEs) Fannie Mae and Freddie Mac. Loans that exceed limits set by Fannie Mae and Freddie Mac are called nonconforming or “jumbo” loans. The GSEs set limits relative to median income in different counties. In Boise and the surrounding communities we serve, those limits are:
- $453,100 for a one-unit home
- $580,150 for a two-unit home
- $701,250 for a three-unit home
- $871,450 for a four-unit home
It’s important to understand that if you require a loan that exceeds these limits, you’ll need a jumbo loan. Because they aren’t repurchased through GSEs, nonconforming loans pose a higher risk to lenders. They typically require a down payment of 20-30% and have higher interest rates than conforming loans. However, when the house you wish to purchase exceeds Fannie and Freddie’s limits, a jumbo loan is the solution for financing.
The Future Awaits
If you’re ready to start looking for a home in Boise, Pocatello, Blackfoot, Idaho Falls, Rigby, Rexburg, or surrounding Idaho, begin your search with Bell Financial Group. Our certified mortgage experts have been helping clients find home financing solutions for more than 20 years in the local area. We have connections with all of the other experts you’ll need in your journey, including real estate agents, contractors and more. We want to exceed your expectations. Contact us to schedule a consultation today and get a quote.