Conventional Mortgage in Georgia: What You Need to Know

Before you start house hunting, it’s important to understand your mortgage options and why a conventional mortgage in Georgia could be the best choice for your situation. 

Conventional mortgages are popular home loan choices, offer a number of significant advantages for home buyers, and have a longstanding reputation for being safe financing options. 

Let’s take a closer look at conventional mortgages and see if they’re right for your home-buying goals. 

What is a conventional mortgage loan?

A conventional loan is a term for any mortgage home loan that isn’t backed or insured by a government agency—like VA loans (backed by the Department of Veteran Affairs) or FHA loans (insured by the Federal Housing Administration).

Home loans backed by government agencies are required to follow strict guidelines for loan limits, interest rates, eligibility or qualification regulations, down payment minimums, and other criteria.

These standardized guidelines can make it challenging for homeowners to qualify.

With a conventional mortgage in Georgia, lenders aren’t limited by the same restriction and can offer interest rates, eligibility or qualification criteria, down payment requirements, and other mortgage terms based on their own criteria. 

Conforming vs. non-conforming loans

Conventional mortgages come in two forms: conforming and non-conforming loans. 

Conforming conventional mortgages are those home loans that follow Fannie Mae and Freddie Mac’s established guidelines. These guidelines determine loan limits, i.e., how much someone can borrow. 

Conventional loan limits 2022

For 2022, single-family homes in most areas of the country fall under a conforming loan limit of $647,200, while Hawai’i, Guam, Alaska, and the U.S. Virgin Islands allow single-family home loans up to $970,800.

Jumbo loans in Georgia 2022

Loans for more than the loan limits above are called non-conforming or jumbo loans. 

Because they aren’t limited by Fannie and Freddie regulations, jumbo loan lenders in Georgia set their own limits. Most mortgage lenders offer both conforming and non-conforming conventional mortgages.

Conventional mortgage advantages

Low-interest rates and favorable terms are just some of the advantages a conventional mortgage in Georgia can offer borrowers with good credit and stable employment and income.

Better interest rates with good credit

Conventional mortgage interest rates typically reward better (i.e., higher) credit scores. 

Most lenders typically look for a credit score of 620, although borrowers with scores of 740 typically get the best possible conventional mortgage interest rate. The minimum credit scores required will also vary by lender. 

If your credit score falls on the lower end of the scale, taking some time to repair it and move up a few points before you apply for the mortgage can be worth it to result in a lower interest rate. 

Use a mortgage calculator to see your potential monthly payments with different interest rates. Getting an interest rate even just one percent lower can potentially save homeowners thousands of dollars during the lifetime of their home loan. 

Small down payments

It’s a myth that all conventional mortgages need a 20% down payment to qualify. 

A conventional mortgage in Georgia requires as little as 3% —that’s less than the typical down payment for FHA home loans. FHA loans generally require a minimum 3.5% down payment. 

You will have to pay mortgage insurance if you opt for a down payment of less than 20% of your home’s purchase price. 

But unlike FHA home loans that make borrowers pay mortgage insurance for the full mortgage term, you can stop paying insurance early with a conventional mortgage. 

You no longer need to pay mortgage insurance once you build up 20% equity in your home. Homeowners can increase their home equity through monthly mortgage payments, increasing property values, or a combination of both.

Homeowners with a 20% down payment do not need to pay mortgage insurance. 

Term options 

Making bigger monthly mortgage payments for a shorter timeframe has the potential to save homeowners tens of thousands of dollars—sometimes more over their loan’s lifetime.

If your homeownership goals include paying off your home quickly, a conventional mortgage in Georgia could help. 

Conventional mortgages allow borrowers to save money on interest payments with loans for shorter terms, including 15 and 20-year terms. 

Some lenders offer additional shorter terms, such as 10-, 12-, or 17-year terms. Discuss your home-buying goals with your mortgage lender to find out what term options are available. 

Less expensive closing costs

Government-backed loans often include a funding fee that helps ensure the loan program will be around for other borrowers in the future. And while some programs allow you to roll those fees into the total amount of your mortgage, they can quickly add up. 

Conventional loans don’t have upfront funding fees, which can save you money. 

Many homeowners find conventional loans in Georgia less expensive than government-backed home loans. 

Pro tip: Use a mortgage loan comparison calculator to help you determine the difference between two loans. 

Buy the type of property you want, where you want

Unlike FHA, USDA, and VA home loans that put restrictions on the types of properties they finance, you can use a conventional mortgage in Georgia to buy a variety of homes, including 

• Primary residence
• Second/ vacation homes
• Investment, rental (including Airbnb) properties
• Multi-family dwellings
• Rural or urban homes
• Manufactured (i.e., mobile or prefab homes) homes 

Additionally, conventional mortgages don’t limit where you can buy a home like USDA home loans.

Borrowers in Georgia can only use government-backed home loans to purchase owner-occupied properties. If you want to use an FHA, VA, or USDA loan, you must live in the property. 

Save money with a conventional refinance

Switching to a conventional mortgage in Georgia can often offer a better interest rate while eliminating mortgage insurance. 

Many homeowners can save money by refinancing their existing government-backed home loan into a conventional mortgage, especially if they have built up 20% equity in their home. 

How to apply for a conventional mortgage loan in Georgia

With its low-interest rates, small down payment minimums, and no mortgage insurance option, a conventional mortgage in Georgia can be a great option for borrowers with good credit. 

At AAA Banking, we’re here to sit down with you and discuss your homebuying goals in detail. 

Whether you’re planning for your first home or are interested in refinancing your existing mortgage, we want to help you find the best home loan product to meet your needs. Reach out to one of our trustworthy, licensed home loan officers today.

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