What is a Conventional Loan?

 

A conventional loan is a type of mortgage that is not part of a specific government program, such as FHA, USDA or VA.

Borrowers choose conventional mortgages because they offer the best interest rates and loan terms, usually resulting in a lower monthly payment and down payments from 3% (first Time home buyers) to 20%.

To qualify, you must have a stable income, credit score above 620.

​

There are two preliminary categories of conventional mortgages:

1. Conforming: A conforming mortgage that follows the guidelines from Freddie Mac and Fannie Mae, including loan limits.

2. Non-Conforming: These mortgages include both "Jumbo loans" (which exceed the loan limits imposed by government agencies securing loans), niche products for unusual circumstances and riskier products that are much less common these days.

 

In general:

1. FHA Loans are intended for borrowers who cannot afford a sizable down payment, have high DTI or low credit.

2. VA Loans They're reserved for the On-duty military and veterans.

3. USDA Loans Are for borrowers with low to moderate income and living in rural areas.

4. Jumbo Loans They are intended for excellent borrowers with excellent credit seeking to fund loan amounts greater than the amount permitted by Fannie Mae or Freddie Mac.

​

To find out if you qualify for a conventional loan, see us for a free consultation.

​

We are always available to answer your questions.