Conventional Loans

Government-backed loans, such as FHA loans and VA loans, tend to appeal to buyers who might not have perfect credit or who have limited down payment availability. Home loans available through these programs are also limited to certain amounts. Any home loan not backed by a government entity is considered a conventional loan. Conventional loans often appeal to buyers with stronger credit and income or buyers who need a loan that exceeds the amount available through government programs. At Vault Mortgage Lending, we offer great rates and terms on a variety of conventional loans throughout Madera, Firebaugh, Los Banos, Merced, Chowchilla, Fresno and the surrounding California areas.

Fannie Mae and Freddie Mac purchase most of today’s home loans. To be eligible for purchase, these loans need to meet certain criteria. If a home loan meets all requirements and is eligible for purchase, it is considered a conforming loan. Non-conforming loans are loans that are ineligible for purchase. One of the first things these entities look at is the amount of the loan. Conforming loans are limited to $424,100 although in certain high-cost areas, the maximum amount can be as high as $636,150. The most common non-conforming loan is the jumbo loan. A jumbo loan is simply a conventional loan that exceeds the conforming loan limit for an area.

In the past, conventional loans required a minimum 20% down payment. Conventional loans have since become available with much lower down payment requirements. Borrowers who choose to make the traditional 20% down payment are able to avoid private mortgage insurance (PMI). Those who make smaller down payments can cancel PMI once 20% equity is reached. Mortgage insurance on government-backed loans such as FHA loans can never be cancelled.

Conventional loans are available as fixed-rate mortgages, adjustable-rate mortgages (ARM), or a combination of the two known as Hybrid ARMs. Depending on your needs, there are benefits to each type of rate.

The rate on a fixed-rate mortgage will never change throughout the life of the mortgage regardless of what happens in the market. Fixed-rate mortgages offer stability which many buyers prefer. Fixed-rate mortgages are most commonly available as 15-year, 20-year, or 30-year loans.

On the other hand, the rate on an adjustable-rate mortgage will fluctuate depending on the market. ARMs tend to start with a lower rate than comparable fixed-rate mortgages. Buyers who are planning to relocate in the near future may find that ARMs are the best option for their needs. Hybrid ARMs are a combination of fixed-rate and adjustable-rate mortgages. A 7/1 Hybrid ARM would begin with a 7-year fixed period. The rate will be adjusted depending on market conditions each year thereafter.

Whether you are looking to purchasing your very first home in California or are interested in refinancing a current mortgage, Vault Mortgage Lending has a conventional loan that will meet your needs. For more information on our conventional loan offerings in Madera, Firebaugh, Los Banos, Merced, Chowchilla, and Fresno, contact us today.