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What are conventional loans?

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With a conventional loan, you can skip paying for monthly private mortgage insurance if you put at least 20% down on your home.

 

Do I need to pay for private mortgage insurance (PMI)?

With a conventional loan, you will need to pay PMI if you put less than 20% down. However, you can apply to have the PMI removed4 once you've paid enough between mortgage payments (and possibly extra payments to principle) that your loan balance is 80% (or less) of your home's original value.

 

What are the benefits of applying for a conventional loan?

The biggest benefit of a conventional loan is the flexibility. Unlike a VA loan, you do not need to be a member of a particular group to apply for a conventional loan. And unlike a USDA loan, you do not need to be purchasing your home in a particular type of community to qualify. And if you have any unusual types of needs -- for example, if you want to buy a home and rent it out for a year before you move in, or you want to buy a multi-family property with more than four units -- you may be able to find a conventional loan that will allow you to do this.

Another benefit is the ability to forgo paying PMI once you have 20% equity in your home. With an FHA loan, you often end up paying for a form of mortgage insurance even after you have 20% equity in your home.

And finally, with conventional loans, you can shop around. Since different banks may have slightly different underwriting standards, you may find that you qualify for a loan with one bank but not with another – or that one bank gives you a better interest rate than another.

If you're ready to start shopping for your new home, get in touch with a Synovus mortgage specialist today. We're here to help you get the financing you need to purchase your next home.

Important disclosure information

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

  1. Consumer Financial Protection Bureau, "What is a conventional loan?" Updated February 24, 2017, accessed October 2, 2020. Back
  2. Consumer Financial Protection Bureau, "What are Fannie Mae and Freddie Mac?" Updated April 5, 2016, accessed October 2, 2020. Back
  3. Consumer Financial Protection Bureau, "Conventional loans," accessed October 2, 2020. Back
  4. Consumer Financial Protection Bureau, "When can I remove private mortgage insurance (PMI) from my loan?" Updated September 13, 2017, accessed October 2, 2020. Back