Home purchasing

5 different mortgages to consider when buying a home

According to Investopedia, a conventional mortgage is a common type of home loan that is not insured by the United States government but rather through a private lender. Examples of private lenders offering these loans typically include banks, local credit unions, or even companies exclusively dedicated to providing mortgages. Although conventional loans are not guaranteed by the federal government, they can be (and usually are) guaranteed by the government, usually through the Federal National Mortgage Association, commonly known as Fannie Mae, or the Federal Home Loan Mortgage Corporation, known as Freddie Mac.

Qualifying for a conventional mortgage can be a bit trickier than some of the other mortgage options available. Borrowers are usually required to complete a formal mortgage application and provide the potential lender with their current credit score, complete credit history, pay stubs to prove income, and recent bank statements. If large, unexplained money transfers appear on bank statements, borrowers will be asked to explain their cash flow to prevent money laundering and other illicit use of funds.

Interest rates on conventional home loans are generally at or above market interest rates, unlike rates on federally issued loans, which tend to be lower.