Conventional Loans
Conventional Loan
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. These loans are offered by private lenders and can be either conforming or non-conforming, depending on whether they meet Fannie Mae and Freddie Mac guidelines. Conventional loans are a popular choice for borrowers with strong credit and stable income.
Eligibility:
Meet lender underwriting standards.
Minimum credit score (typically 620+).
Debt-to-income ratio generally below 45%.
Down payment as low as 3% for qualified borrowers (higher may be required).
For conforming conventional loans, loan amount must be within FHFA limits.
Benefits:
Lower Long-Term Costs: No upfront mortgage insurance premiums like FHA loans.
Flexible Options: Available for primary homes, second homes, and investment properties.
Competitive Rates: Strong borrowers often receive favorable interest rates.
Considerations:
Private Mortgage Insurance (PMI): Required if down payment is less than 20%.
Stricter Credit Requirements: Less forgiving than government-backed loans.
