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Whether you’re purchasing your first home or upgrading to your forever home, American United Federal Credit Union is your trustworthy source for a conventional mortgage. This common type of home loan is guaranteed by a private lender rather than a federal agency and may carry a fixed or variable interest rate and a term of up to 30 years.
What Is a Conventional Mortgage?
Two-thirds of American homes are financed using a conventional mortgage. This type of loan offers flexible terms and low-interest rates for applicants with a credit score of at least 740. Most conventional mortgage programs require a debt-to-income ratio of 45 to 50%, which means you spend less than half your monthly income on auto loans, credit cards, student loans, and other debt payments.
Because conventional mortgages aren’t guaranteed through the Federal Housing Authority or Veterans Administration, qualification requirements are more stringent. However, the application process is usually more streamlined than for a federal loan program, especially if you have a high FICO score.
What Are the Benefits of This Financing?
With a conventional loan, you can finance up to 95% of the property’s value. This puts a home loan in reach for those with limited down payment funds. In addition, down payment funds can be gifted from a parent or family member. Although private mortgage insurance is required for a down payment of less than 20%, the monthly premium is typically more affordable than with other mortgage programs. You can also drop your PMI payment when you reach at least 22% equity in the home, unlike with an FHA loan where PMI is charged for the life of the loan. Conventional loans are available for owner-occupied properties as well as for vacation homes and certain investment properties.
Why Should I Choose American United Federal Credit Union for My Home Loan?
At American United Federal Credit Union, we’ve been helping Utah residents and other Americans with home financing since 1952. Our services are available to anyone who lives, works or attends school or church in Salt Lake and Tooele Counties, as well as the family members of those individuals. Get in touch today to learn more about applying for a conventional mortgage through our affordable home loan program.