Let’s talk Conventional loans…and all the nitty gritty details…
Conventional loans offer greater flexibility on property types, higher loan limit values, and the opportunity to remove private mortgage insurance.
A conventional mortgage is a homebuyer’s loan made through a private lender. Compared to a Federal Housing Administration (FHA) loan, a conventional loan often offers a higher interest rate. It can also require a higher credit score to qualify.
On a conventional loan, you must pay private mortgage insurance (PMI) if your down payment is less than 20%. Your mortgage investors are covered by PMI in the event of your loan default. Depending on your loan type, credit score, and down payment amount, PMI costs can change. You can ask your lender for a new appraisal if you reach 20% equity due to an increase in the value of your house so they can use the updated value to reassess your need for PMI. Your lender will automatically cancel the PMI on your loan as soon as you reach 22% equity in the property.