When you’re shopping for a home loan, it’s important to fully understand your options so you can get the most out of your mortgage. Two loan types you may come across are Conventional Loans and Jumbo Loans, particularly if you are financing a higher-priced home. Each serves a unique purpose depending on the price of your home and your financial situation. Let’s take a closer look at what these loan options offer, how they work and where they differ.
What Is A Conventional Loan?
A Conventional Loan is one of the most popular mortgage options available. They typically work best for borrowers with good to excellent credit and fall within standard loan limits set each year.
Conforming loan limits (set annually by the FHFA) determine how large a mortgage can be while still qualifying as a conventional loan. If a loan exceeds these limits, it typically requires Jumbo Loan financing instead. Conventional Loans stay within conforming loan limits, so they are a great fit for primary residences and can make home purchases more accessible for first-time and repeat buyers alike.
These loans also offer lower down payment options, as low as 3% for qualified buyers. Borrowers can remove their private mortgage insurance (PMI) payment with 20% down, and choose from fixed-rate options with terms from 10, 15, 20, 25 or 30 years. Purchase, rate-and-term refinance and cash-out refinance options are available.
What Is A Jumbo Loan?
A Jumbo Loan is a great option for higher-priced homes in more expensive housing markets, that go above conforming loan limits. With a Jumbo Loan, you get fixed-rate loan options for larger loan amounts, financing for loan amounts up to $3 million, and options for primary residences, vacation homes and investment properties.
Additionally, Jumbo Loans offer the ability to purchase, refinance or take cash out. They’re well-suited for borrowers with strong credit and financial profiles.
The Key Differences
Conventional Loans stay within conforming loan limits, whereas Jumbo Loans exceed those limits to support higher-priced properties. Conventional Loans allow for lower down payments, whereas Jumbo Loans typically require a larger down payment. Both Conventional and Jumbo Loans can be used for primary residences, vacation homes and investment properties. For more information on financing investment properties, learn about our Debt Service Coverage Ratio (DSCR) Home Loans here or talk to one of our Home Loan Experts.
The right loan for you depends on how much you plan on spending, your personal financial goals and overall mortgage needs. If you’re looking to purchase a home within standard loan limits and lower down payment flexibility, a Conventional Loan is the right fit. However, if you’re buying a higher-priced home and need the loan amount to exceed conforming limits, a Jumbo Loan is likely the way to go.
Looking to start saving today on your home loan? Let’s upgrade your mortgage and put money back in your wallet with a new Purchase or Refinance Loan.*
6 Money-Saving Tips To Start Today:
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Pay Off Your Loan Sooner Switch to shorter loan terms to save on interest.* |
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Lower Your Monthly Payment Refinance with longer terms, so more money stays in your wallet.* |
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Consolidate Debt Cash-out to reduce high-interest credit card debt. |
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Pay For Larger Expenses Invest in your home with updates that will yield a higher return should you decide to sell in the future. |
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Get Extra Savings After you have financed a home with us once, save up to $750 on all your future refinances and new home purchase loans with your AmeriWallet Benefits.** |
If you are interested in learning more about how a refinance or new home purchase loan can benefit you, just give us a call at 877.715.9908.
Imagine The Possibilities With Your Better Home Loan!
*By refinancing, your total finance charge could be higher over the life of the loan.
**As a member of the AmeriHome family, borrowers are part of the AmeriWallet Rewards program. If you completed a home loan with us once, you will qualify for a $750 lender credit for all of your future refinances or home purchases done with AmeriHome, for any property you own. To qualify for this offer, you must have previously financed the purchase of a home or refinanced with AmeriHome. You have financed with AmeriHome when AmeriHome Mortgage Company, LLC appears on the previous Promissory Note for your loan, and you are listed as a borrower on the Note. Credits will be applied only if your loan closes with AmeriHome. This offer can not be combined with any other offers and is not applicable for FHA Streamline, or VA IRRRL Refinance transactions. Other restrictions may apply. Terms and conditions are subject to change. AmeriWallet Rewards program is subject to termination without notice.
