Why a Conventional Home Loan Might Be Right For You
theresa rolen • January 29, 2025
Why Go Conventional?
Why a Conventional Home Loan Might Be Right for You
Buying a home is a big decision, and choosing the right kind of loan is super important. While there are many types of home loans out there, today we’re going to talk about conventional home loans and why they can be a great choice for many people.
What Is a Conventional Home Loan?
A conventional home loan is a mortgage that isn’t backed by the government. This means it’s different from loans like FHA, USDA, or VA loans, which are supported by government programs. Conventional loans are offered by private lenders, like banks and credit unions.
Benefits of a Conventional Home Loan
Here are some reasons why a conventional home loan might be better for you than other types of loans:
- Lower Costs Over Time
- While government-backed loans often have lower down payments, they usually come with extra fees. For example, FHA loans require you to pay mortgage insurance premiums (MIP) for many years. Conventional loans, on the other hand, don’t require mortgage insurance if you can put down at least 20%. This can save you a lot of money over time!
- More Flexible Terms
- Conventional loans give you more options for how long you want to repay the loan. You can choose a 15-year loan if you want to pay it off faster, or a 30-year loan for smaller monthly payments. This flexibility lets you pick what works best for your budget.
- Higher Loan Limits
- If you’re looking to buy a more expensive home, conventional loans often allow for higher loan amounts compared to FHA or USDA loans. This is especially helpful in areas where homes cost more.
- No Restrictions on Property Location
- Some government-backed loans, like USDA loans, require the home to be in a specific location, usually rural areas. Conventional loans don’t have these restrictions, so you can buy a home anywhere you like.
- Easier to Stop Paying Mortgage Insurance
- If you can’t put 20% down at first, you might need to pay for private mortgage insurance (PMI). The good news is that with a conventional loan, you can stop paying PMI once you’ve built enough equity in your home. This isn’t always the case with government-backed loans.
- There are first-time home buyer options that may be available to allow you to buy with a 3% down payment.
- Down Payment Assistance (DPA) Programs also DO exist for conventional loans through some lenders. Be sure to ask, or work with a mortgage broker that may have more lenders and programs available than a standard bank or retail shop.
Benefits of Working with a Broker for a Conventional Loan
Working with a mortgage broker can make the process of getting a conventional loan much easier. Here’s how:
- Access to Multiple Lenders
- Brokers work with a variety of lenders, so they can shop around to find the best rates and terms for you. This means you’re more likely to get a great deal, and may have options that regular banks and retail lenders don't have the same access to.
- Expert Advice
- Mortgage brokers are experts in the home loan process. They can guide you through the paperwork, explain your options, and help you avoid common pitfalls.
- Time Savings
- Instead of applying to multiple lenders on your own, a broker does the legwork for you. They gather your information once and use it to find the best options, saving you time and hassle.
- Tailored Solutions
- Brokers understand that everyone’s financial situation is different. They can help you find a conventional loan that fits your unique needs, whether it’s a lower interest rate, better terms, or fewer upfront costs.
- Support During the Entire Process
- From pre-approval to closing, a broker can answer your questions and help you stay on track. This extra support can make the experience much less stressful.
Is a Conventional Loan Right for You?
A conventional loan could be a great choice if:
- You have a good credit score.
- You can save for a bigger down payment.
- You’re buying a home in a higher price range.
If these sound like you, a conventional loan might save you money in the long run and give you more options for your dream home.
Final Thoughts
When you’re looking to buy a home, it’s important to understand your loan options. Conventional home loans offer many benefits, like lower costs over time, flexible terms, and no location restrictions. Working with a mortgage broker, like me, can help you find the best loan for your needs and make the process smoother. Talk to a lender or broker like me to see if this type of loan is the best fit for you. With the right loan, you’ll be one step closer to owning your dream home!
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When a Pre-Approval Isn’t Actually Approval Why Realtors Can’t Afford to Blindly Trust Every Lender In today’s market, getting an offer accepted isn’t the hard part. Getting it to close is. Lately, I’ve been pulled into multiple “rescue missions”—offers accepted, homes taken off the market, timelines set… only for the deal to start unraveling once underwriting gets involved. Different buyers. Different lenders. Same root problem. A pre-approval that never should’ve been issued . A Real Scenario Realtors Are Seeing More Often A buyer submits what looks like a strong offer. The pre-approval checks the box. Everyone moves forward. But once the file is examined: Less than two years of work history Variable income only (hourly, commission, fluctuating pay) Prior history? Straight out of high school This doesn’t mean the buyer can’t qualify. It does mean the file requires precision , not assumptions. The Truth About Pre-Approvals (This Is the Part That Matters) A pre-approval is only as strong as : the income used to qualify it the guidelines actually followed and the lender who understands the difference between “maybe” and “mortgageable” Variable income + limited history isn’t impossible — but it requires structure, documentation, and time . What it does not tolerate is shortcuts, guesswork, or optimism disguised as confidence. Where Deals Start to Break Many weak pre-approvals rely on: Income that hasn’t been averaged long enough Pay that looks good on paper but doesn’t meet guideline requirements Front-end approvals that haven’t been reviewed by underwriting Everything looks fine—until underwriting gets involved. And underwriting always gets involved. What Buyer’s Agents Should Be Asking (Without Playing Underwriter) You don’t need to know every lending rule. You do need to ask smarter questions. 1. Is the buyer’s income salaried or variable? If it’s variable, averaging and seasoning rules apply. 2. How much of that income is actually being used to qualify? Not projected income. Not potential income. Qualified income. 3. Does the buyer meet the full two-year work history requirement? If not, how is the gap being documented and justified? 4. Has an underwriter reviewed this income yet—or is this a front-end pre-approval? This affects how much risk the seller is taking on. 5. What’s the backup plan if income is reduced or disallowed? Strong lenders already know the answer. If those answers aren’t clear, the offer isn’t strong—no matter the price. Why This Matters for Sellers When a seller accepts a shaky offer: The home comes off the market Showings stop Leverage disappears If the deal collapses late, sellers lose time, momentum, and often negotiating power. A strong offer isn’t just about price. It’s about: financing that survives underwriting a lender who answers the phone and a buyer who is truly qualified The Realtor Takeaway Trust is important. Verification is smarter. The best agents don’t just get contracts signed—they get them closed . Ask better questions. Vet the lender. And remember: hope is not a lending strategy. Book time to chat My Calendar Theresa Rolen, Loan Originator NMLS# 2249004 | Brokerage NMLS #1850081 Cell 913-705-0049 Email Theresa@SummitLendingUSA.com Theresa Rolen Cell (913) 705-0049 Trolen.myjourney@outlook.com
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