Conventional mortgages are insured by private companies. Typically, these loans must meet the guidelines set forth by either Fannie Mae or Freddie Mac. There are a number of conventional loan types offered by First Home Mortgage with down payment options starting as low as 3% down.
Some of the popular options include:
A fixed-rate mortgage has an interest rate that stays the same for the entire life of your loan. This offers a predictable monthly payment for a term of 10 – 30 years.
- Interest rate security
- Monthly payment stability
- Best for buyers planning to stay in their homes for a long time
Adjustable rate mortgages (ARMs) may allow you to lock in a low, introductory interest rate that could increase over time. A hybrid ARM offers a fixed period (typically 3-10 years) followed by a yearly adjustment to the interest rate. Hybrid ARMs are often represented by fractions, such as 5/1 – meaning the first rate reset takes place after five years and continues to reset each year for the life of the loan.
- Low starting interest rate
- Lower monthly payments during the initial term
- Best for buyers planning to keep their loan for a shorter period
Jumbo loans typically have higher loan amounts not allowed for standard conforming programs (set by Fannie Mae and Freddie Mac). This allows borrowers to a purchase a higher priced home with an affordable down payment.
- Fixed and ARM options
- Loans up to $3 Million
- Best for borrowers who are in the market for higher priced homes
- Require higher credit scores
- Require additional cash/investment reserves