What Are Conventional Loans?
Conventional loans are mortgage agreements that are not insured or guaranteed by the federal government (unlike FHA, VA, or USDA loans). Instead, they are backed by private lenders and usually follow the credit and income guidelines set by Fannie Mae and Freddie Mac.
Because they are not government-insured, they often require a higher credit score and a slightly larger down payment, but they offer more flexibility in terms of property types and loan structures. They are available in both fixed-rate and adjustable-rate (ARM) options, giving you the choice between long-term stability or potential initial savings.
Key Benefits
- Competitive interest rates and lower costs
- No upfront mortgage insurance premium (MIP)
- PMI may possibly be cancelled once 20% equity is reached
- Down payments as low as 3% for first-time buyers
- Flexible loan terms: 10, 15, 20, and 30-year fixed
- Higher loan limits than standard FHA loans
Eligibility Requirements
Is a Conventional Loan Right for You?
Conventional loans are an excellent choice for borrowers with solid credit scores and a stable financial foundation. If you can afford at least a 3-5% down payment and have a credit score above 620, a conventional mortgage might save you significant money over the life of the loan due to lower interest rates and the ability to eliminate mortgage insurance once you build enough equity.
- Individuals with credit scores of 620 or higher.
- Those looking for flexible properties like second homes or investment units.
- Borrowers with at least a 3% - 20% down payment available.
- Homeowners who want to eventually remove their monthly mortgage insurance.
Free Quote