Conventional Loans
What Are Conventional Loans?
Conventional Loans are mortgage loans that are not insured by the government (like FHA, VA, USDA or Reverse Mortgage Loans), but they meet the lending guidelines that have been set by Fannie Mae or Freddie Mac. Most commonly known as traditional mortgages. Typically, conventional loans have better rates, terms and/or lower fees than other types of loans. However, conventional loans require a borrower to have fair-to-excellent credit, reasonable amounts of monthly debt obligations, a down payment of 1-5% and stable monthly income. Conventional loans are ideal for borrowers with fair-excellent credit and at least a 1-5% down payment.
Why Choose a Conventional Loan?
- Competitive Interest Rates: Conventional loans offer less expensive rate options than government-backed loans.
- Flexible Property Options: Finance primary residences, vacation homes, and investment properties with a single loan type.
- No Upfront Mortgage Insurance or fees: Unlike government insured loans, conventional loans don't require upfront mortgage insurance premiums or funding fees.
- Faster Equity Building: With various term options from 8 to 30 years, you can choose how quickly you build equity and pay off your home.
What are the Conventional Down Payment Requirements?
For Purchase transactions Conventional Loans require the home-buyer to put down at least 1% - 5% of the purchase price of the home. For a Refinance transaction, most lenders require at least 3% equity in the property.
What types of property are eligible?
Conventional loan programs allow you to purchase single-family homes, warrantable condos, planned unit developments (Townhomes), and 2-4 family residences. A conventional loan can also be used to finance a second home or an investment property.
Key Features of Conventional Loans
Not Government-Insured
Unlike FHA, VA, or USDA loans, but meet Fannie Mae/Freddie Mac guidelines
Better Rates & Terms
Typically lower rates and fees than other loan types
1-5% Minimum Down Payment
For qualified borrowers with fair to excellent credit
Flexible Property Types
Primary residence, second home, or investment property
Looking for a Conventional Loan?
Our mortgage professionals are ready to help you find the perfect conventional loan option for your needs.