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The Conventional loan

The most popular loan available on the market, a conventional loan offers low interest rates with relatively low down payments to those who can meet basic requirements for credit score, down payment and debt-to-income ratio. Offered by private lenders and not government backed, you can put as little as 3-5% down on a conventional loan and start your path to home ownership.


Conventional Loan FAQ

What do I have to put as a down payment for a conventional loan?

If you have good credit, you can get into your home for as little as 3% down on qualification. However, if you don’t put 20% down, the lender will be required to add PMI to your mortgage payments. PMI, or Private Mortgage Insurance, protects the lender should a home buyer default on a home without a significant equity position.

If I put down less than 20%, how much is the PMI per month?

Like any other insurance, the cost of PMI varies. A good rule of thumb is that PMI will typically equal 0.5-1% of your loan amount each year, but its paid monthly with your mortgage. For example, if you have a $600,000 loan your PMI would likely be in the range of $250-$500 per month. If you want to avoid monthly PMI, but can’t put 20% down on a home, talk to your Next Level mortgage specialist to see if a single premium upfront PMI makes sense for you.

Is there a limit for a conventional loan?

Conventional loans do have limits. For 2023, that limit is $726,200. However, for certain high-cost markets (like Los Angeles), that limit may be a higher amount - up to $1,089,300 in 2023. If you’re buying a home that is more expensive than that, we’ve still got loan products that will work for you.

What kind of home can I buy with a conventional loan?

You can use your conventional loan to buy your primary residence, an additional home or investment property. This can be a single-family home, condo, or townhome. If you’re looking to get a mortgage on multi-family home, you can use this loan product for a 2–4-unit property as well.

Is a conventional loan better for me than an FHA loan?

It always depends on the situation, but if you have good credit, money to put down and don’t carry a lot of debt, a conventional loan is generally the best way to purchase your home. If your credit needs some work and/or you want to put less money down, an FHA loan might be better for you. Keep in mind if you are buying anything other than a primary residence, you won’t be able to use an FHA loan.

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