Standard Mortgage Financing
with Competitive Terms
A conventional loan is a mortgage not insured or guaranteed by the government. These loans offer competitive interest rates, flexible terms, and are ideal for borrowers with strong credit and stable income. Perfect for purchasing a primary residence, second home, or investment property.
Standard Mortgages with Flexible Terms
A conventional loan is a mortgage not insured or guaranteed by the government. These loans are backed by private lenders and follow guidelines set by Fannie Mae and Freddie Mac. Conventional loans offer competitive interest rates, flexible terms, and are ideal for borrowers with strong credit and stable income. Perfect for purchasing a primary residence, second home, or investment property.
Key Benefits of Conventional Loans
Competitive Interest Rates
Conventional loans often offer lower interest rates compared to government-backed loans, especially for well-qualified borrowers.
Flexible Down Payment Options
Down payments as low as 3% for first-time homebuyers, or 5% for repeat buyers. Put 20% down to avoid Private Mortgage Insurance (PMI).
Multiple Property Types
Available for primary residences, second homes, and investment properties (1-4 units).
PMI Cancellation
Once you reach 20% equity, you can request to cancel Private Mortgage Insurance, reducing your monthly payment.
Fixed or Adjustable Rates
Choose between fixed-rate mortgages (15, 20, 30 years) or adjustable-rate mortgages (ARM) with initial fixed periods.
Higher Loan Limits
Conforming loans up to $766,550 in most areas (2024), with higher limits in high-cost counties. Jumbo loans available for larger amounts.
Conventional Loan at a Glance
Conventional Loan Requirements
Credit Score
Minimum 620 FICO for most conventional loans. Better rates typically require 660-740+ scores.
Down Payment
As low as 3% for first-time homebuyers. 5% for repeat buyers. 15-20% for investment properties.
Debt-to-Income Ratio
Typically 43% or lower. May go up to 50% with strong compensating factors like high credit score or significant reserves.
Income Documentation
Standard income verification: W-2s, tax returns, pay stubs. Alternative documentation may be available for self-employed borrowers.
Employment History
Stable employment history, typically 2 years in the same field. Gap in employment may require explanation.
Property Types
Primary residences, second homes, and 1-4 unit investment properties all eligible.
Conventional vs. Government Loans
No Upfront Mortgage Insurance
Unlike FHA loans, conventional loans don't require upfront mortgage insurance premiums (MIP).
PMI Can Be Removed
Once you reach 20% equity, you can cancel PMI. FHA MIP often stays for the life of the loan.
Higher Loan Limits
Conforming limits are higher than FHA limits in many areas, allowing for larger loan amounts.
Investment Properties Welcome
Conventional loans are a great option for investors purchasing 1-4 unit rental properties.
Frequently Asked Questions About Conventional Loans
A conventional loan is a mortgage not insured or guaranteed by the government. These loans are backed by private lenders and follow guidelines set by Fannie Mae and Freddie Mac. They offer competitive interest rates and flexible terms for qualified borrowers.
Most conventional loans require a minimum credit score of 620. Better rates are typically available for scores 660-740 or higher. Higher credit scores may qualify for lower down payment options.
First-time homebuyers may qualify for as little as 3% down. Repeat buyers typically need 5% down. To avoid Private Mortgage Insurance (PMI), you'll need 20% down.
Private Mortgage Insurance (PMI) protects the lender if you default. You can avoid PMI by putting 20% down. If you have PMI, you can request cancellation once you reach 20% equity in your home.
For 2024, the conforming loan limit is $766,550 for most counties. Higher limits apply in high-cost areas. Loans above these limits are considered jumbo loans and may have different requirements.
Yes, conventional loans are available for 1-4 unit investment properties. Down payment requirements are typically higher (15-20%) and interest rates may be slightly higher than primary residence loans.
Fixed-rate mortgages have the same interest rate for the entire loan term (typically 15, 20, or 30 years). Adjustable-rate mortgages (ARMs) have a fixed rate for an initial period (e.g., 5, 7, or 10 years) before adjusting periodically based on market conditions.