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Purchase Loans — Conventional Mortgages for Buyers Without Government Guarantees

You’ve probably heard the term “purchase loan” thrown around a few times if you’re in the research phase of applying for a home loan. Applying for a home loan in California, Nevada, or Colorado can be confusing. Still, we’re here to help you determine which loan type is best suited for you and your unique situation.

If you’ve got reasonable credit, some liquidity to put money down towards your home, and solid income and DTI, a conventional purchase loan may be right up your alley.

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So, what is a purchase loan, and why do I keep hearing about them?

The term “purchase loan” is a catch-all term used to describe the various types of traditional “paper” loans that have existed in the mortgage industry for decades that are not backed by government entities. Purchase loans can also be referred to as conventional loans.

These types of loans are typically the most straightforward to get approvals for, as they usually require greater down payments and financial creditworthiness to be qualified. Typically speaking, since conventional purchase loans aren’t guaranteed by USDA, FHA, or the VA, they don’t offer applicants the same suite of benefits. Rather than having minimal credit requirements or offering zero percent down on a USDA or VA loan (which are fabulous perks to those who qualify), conventional loan applicants may have to put more money down to secure the type of purchase loan they need.

Some conventional mortgages have low down payment options, but that entirely depends on your other financial metrics and what your particular lender requires. However, it’s important to note that most lenders (including us) will require you to purchase private mortgage insurance if you don’t put more than 20% down towards your new home. This is critical to keep in mind, as it can add high costs to your loan over the long term. Conventional purchase loans most commonly run for 30 years, but applicants who want alternative options can also structure these as 15 or 20-year loans instead.

Purchase loans are readily available for clients in the states that our team at Greenfront mortgage conducts our business, so get in touch with us today if you want to learn more.