Conventional home loan buyers avoid the cost of Private Mortgage Insurance(PMI) when they put down 20% of the purchase price as their down payment. There are other conventional loan types with smaller down payment percentages; however, the buyer will have to pay PMI.  The PMI will be smaller than other loan types.

Conventional-Loans-1

 

Other advantages to conventional loans include:

  • Low interest rate for borrowers with good credit
  • Fewer penalties and fees
  • Flexible length of loan term (30 year mortgage or 15 year mortgage)
  • This is an option for second home purchases
  • Flexible Mortgage Insurance rates