Conventional Loans

The Possibilities are Endless with Conventional Loans

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. Debbie Mishko at American Pacific Mortgage is a skilled mortgage professional in Gig Harbor with local expertise and the lending power of top national lenders on her side. Contact Debbie Mishko for more details on conventional loans and to get a free quote.

Conventional Loan Basics

Conventional loans differ from nonconventional 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 nonconventional 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 nonconventional loans like an FHA, USDA, or VA loan.

Conforming and Nonconforming 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 nonconforming loans.

Conforming limits vary based on the median income in each county. For homes in Pierce County, WA, the limits are:

  • $667,000 for a one-unit property
  • $853,900 for a two-unit property
  • $1,032,150 for a three-unit property
  • $1,282,700 for a four-unit property

When you decide to purchase a high-value home, you’ll need a nonconventional, 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, nonconforming loans may have higher interest rates than conforming loans. Debbie Mishko at American Pacific Mortgage works with several top lenders across the United States to provide competitive rates 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:

  • Various loan terms available
  • 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 Debbi Mishko at American Pacific Mortgage in Gig Harbor, WA. Whether you’re just learning about conventional loans or are ready to get a quote and begin your search, Debbi can help.