The most common type of mortgage on today’s market is the conventional loan, which is underwritten using Fannie Mae and Freddie Mac industry guidelines. One of the main advantages of conventional loans (versus other products) is the fact that they typically reach “closed” status rapidly due to the industry wide acceptance of their underwriting terms.
Conventional loans can fall under 30 year, 20 year, 15 year, and 10 year terms, while providing options for fixed interest rates or adjustable rates if an ARM better suits your current situation. As a rule of thumb, a shorter loan term usually comes with a lower interest rate; however, that also means a higher monthly payment because the loan is amortized over a shorter period. Generally speaking, conventional mortgages require an 80% loan-to-value ratio; however, it is possible to obtain as high as a 97% loan-to-value ratio with an excellent credit rating while carrying mortgage insurance.