Conventional Home Loans in South Carolina

What Is a Conventional Loan?

Conventional home loans are the most common type of loan for home purchases. While these private-sector loans are not backed by the government, they do follow the guidelines set by federally-backed mortgage institutions Fannie Mae and Freddie Mac.

Since there is no guarantee to the lender if the borrower defaults on a home loan, conventional loans often carry stricter requirements for approval than government-backed programs such as FHA and VA loans. Conventional mortgages can be very affordable over the long term if the borrower has good credit and enough cash on hand for a down payment.

Benefits of Conventional Home Loans in South Carolina

Conventional mortgages offer a range of benefits to home buyers. Those opting for a conventional home loan in South Carolina can take advantage of lower interest rates and more flexible terms and — if they can pay at least 20% down — forgo paying private mortgage insurance (PMI) over the entire lifetime of the loan.

Types of Conventional Loans

You’re considering applying for a conventional home loan — now what? First, it’s important to understand the different types of conventional loans. The two most popular conventional mortgages are fixed rate loans and adjustable rate mortgages (ARMs).

There are two key differences between fixed rate loans and ARMs:

1. Interest rate: While fixed rate loans have a set interest rate that won’t change over the lifetime of the loan, adjustable rate mortgages can vary over time, either rising or falling depending on the interest rate index.
2. Loan qualification: Qualifying for an ARM may be easier than qualifying for a fixed rate mortgage, especially for borrowers with higher debt-to-income (DTI) ratios.