St. Louis Conventional Loans
What is a St. Louis conventional loan? A conventional loan is a type of mortgage that is not insured or guaranteed by the federal government. This means that the lender assumes the risk of lending the money to the borrower, and the loan may have stricter requirements for credit score, than a government-backed loan.
A low down payment conventional loan is available with highly competitive rates and a simple approval process. The conventional loan experts at Midwest BankCentre will clearly explain your options and help you choose the right loan type for your unique financial situation.
Conforming vs Non-Conforming Conventional Loans
Conventional loans are often divided into two categories: conforming loans and non-conforming loans. Here's what you need to know about each type:
Conforming Loans: Conventional home loans that meet the loan limits set by the Federal Housing Finance Agency (FHFA). The FHFA sets these limits annually based on median home prices in a particular area. In 2023, the conforming loan limit is $726,200 for most parts of the United States.
Advantages of Conforming Loans:
- Lower interest rates compared to non-conforming loans
- Easier to qualify for than non-conforming loans
- More flexible underwriting guidelines than government-backed loans like FHA or VA loans
Non-Conforming Loans: Conventional home loans that do not meet the loan limits set by the FHFA. These loans are often referred to as jumbo loans and are used for higher-priced properties. Non-conforming loans typically have stricter underwriting requirements than conforming loans and may require a larger down payment and a higher credit score.
Advantages of Non-Conforming Loans:
- May allow a borrower to finance higher-priced properties that exceed the conforming loan limit
- May have more flexible underwriting guidelines than conforming loans
Whether you choose a conforming or non-conforming loan will depend on your specific financial situation and needs. A loan officer at Midwest BankCentre can help you determine which loan option is best for you and guide you through the loan application process.
Advantages of Conventional Loans from Midwest BankCentre include:
- Competitive Interest Rates: Conventional loans often offer lower interest rates. This can save you money over the life of your mortgage loan.
- No Mortgage Insurance with 20% Down Payment: If you put down 20% or more on your home, you can avoid paying private mortgage insurance (PMI), which is typically required with smaller down payments. Some FHA loans require mortgage insurance for the life of the loan regardless of down payment or equity.
- Flexible Loan Terms: A conventional home loan can offer a variety of loan terms, from 10 to 30 years, allowing you to choose the term that best fits your budget and financial goals.
- No Loan Limit: A conventional home loan does not have a maximum loan amount, which means you can borrow as much as you need (as long as you meet the lender's requirements).
- More Loan Options: Conventional loans offer more loan options than government-backed loans.
- No Upfront Funding Fee: Unlike government-backed loans, conventional loans do not have an upfront funding fee, which can save you money at closing.
- Investment Property Financing: Conventional loans can also be used to finance investment properties, making them a great choice for real estate investors.
Types of Conventional Loans
There are many different types of St. Louis conventional loans available to qualified borrowers. Whether you're looking for a conforming loan or non-conforming loan, a fixed-rate mortgage or adjustable-rate mortgage, there is likely a conventional loan option that is right for you. Contact a loan officer at Midwest BankCentre to learn more about your loan options and find the right loan for your unique financial situation.
- Adjustable-Rate Mortgages (ARM): These are a type of conventional home loan that have an up-front fixed rate period longer than one year, typically between 5 and 10 years, but start with a lower interest rate than fixed-rate mortgages. During this time, the interest rate and monthly payments are even lower than a fixed-rate mortgage. However, after the initial period, your rate can change or adjust, usually higher, along with your monthly payments. Adjustable mortgage rates are ideal for people who don’t plan on staying in their home past the time when the interest rate will change, usually after 5-, 7- or a 10-year loan term.
- Fixed-Rate Mortgages: These are conventional home loans with an interest rate that remains the same for the entire term of the loan. This provides borrowers with stability and predictability in their monthly mortgage payment.
Apply For A St. Louis Conventional Loan
Buying a home is one of the largest investments you will make during your lifetime. When you apply for a St. Louis conventional loan, you want to partner with a lender you can trust. With 17 branch locations conveniently located throughout the St. Louis region, our lenders are uniquely familiar with the local housing market and will help you make the best financial decision for yourself and your family.