Conventional Loans

What are Conventional Loans?

Conventional loans are a type of mortgage loan that is not insured or guaranteed by any government agency, such as the Federal Housing Administration (FHA), Department of Veterans Affairs (VA), or the U.S. Department of Agriculture (USDA). These loans are offered by private lenders like banks, credit unions, and mortgage companies. They are the most common type of mortgage used by homebuyers. Apply Now for Conventional Loans.

Key Features of Conventional Loans:

– Typically requires a down payment ranging from 3% to 20% of the home’s purchase price.

– If the down payment is less than 20%, borrowers may need to pay for Private Mortgage Insurance (PMI).

– Conventional loans generally require a higher credit score than government-backed loans.

– A credit score of at least 620 is often required, but higher scores (e.g., 740 and above) can qualify for better interest rates.

– Conforming conventional loans must meet the loan limits set by the Federal Housing Finance Agency (FHFA). In 2024, the conforming loan limit for most areas in the U.S. is $776,600 for a single-family home.

– Loans that exceed these limits are known as “jumbo loans” and have different requirements.

– Required if the down payment is less than 20%.

– PMI protects the lender in case the borrower defaults on the loan and can be removed once the borrower has 20% equity in the home.

– Conventional loans typically offer competitive interest rates.

– Interest rates can be fixed (staying the same for the entire loan term) or adjustable (changing after an initial fixed period).

– Common loan terms include 15, 20, or 30 years.

– The length of the loan term affects the monthly payment and the total interest paid over the life of the loan.

– Conventional loans can be used to finance a wide range of property types, including primary residences, second homes, and investment properties.

– Properties financed with conventional loans must meet certain standards, but these are typically less stringent than those required for government-backed loans.

Types of Conventional Loans:

  1. Conforming Loans

      These adhere to the loan limits and guidelines set by the FHFA. Apply Now for Conforming Loans.

  1. Non-Conforming Loans

      These do not meet the FHFA guidelines, often due to the loan amount exceeding the conforming loan limits (jumbo loans). Apply Now for Non-Conforming Loans.

Conventional loans are a popular choice for borrowers with strong credit histories, stable incomes, and the ability to make a significant down payment. They are widely available and offer a variety of options to suit different financial situations.

Get Pre-approved for a Conventional Loan Today!

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