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.
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