Conventional Loans

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This widely available mortgage type is often the preferred choice for borrowers with solid credit profiles capable of contributing a down payment of at least 3%, or potentially more. Explore what "conventional" means in the mortgage industry to determine if this home loan type aligns with your needs.

A conventional loan is a mortgage not backed by a government agency, such as the Department of Veterans Affairs. These mortgages typically adhere to the down payment and income criteria set by Fannie Mae and Freddie Mac and comply with loan limits established by the Federal Housing Finance Administration (FHFA).

To qualify for a conventional loan, a credit score of at least 620 is generally required, although a score above 740 will secure the most favorable interest rates. Depending on your financial situation and the loan amount, you may qualify for a down payment as low as 3% (note that a higher down payment could result in a lower interest rate).

Considering the versatility and potential cost savings associated with conventional loans, it's crucial to evaluate if this option aligns with your financial goals and homeownership aspirations.

Advantages of Conventional Loans:

• Versatility in Property Types: Conventional loans aren't limited to primary residences; they can also finance second homes, investment properties, and even jumbo loans for high-value homes.
• Control Over Mortgage Insurance: While private mortgage insurance (PMI) is required for down payments below 20%, you can request its cancellation once your loan balance reaches 78% of the home's value. This contrasts with FHA loans, where mortgage insurance premiums can last for the entire loan duration.
• Diverse Loan Structures: While 30-year fixed-rate conventional mortgages are common, you have the flexibility to choose from other terms (such as 15- or 20-year loans) and explore adjustable-rate mortgages.