Conventional Loans

Traditional financing with competitive rates and flexible terms

Conventional loans are mortgage loans that are not insured or guaranteed by the federal government. They typically offer competitive interest rates and flexible terms for borrowers with good credit scores. These loans conform to the guidelines set by Fannie Mae and Freddie Mac, making them a popular choice for homebuyers.

Min Down Payment

3%

Min Credit Score

620

Max DTI Ratio

43%

Loan Terms

10-30 years

Benefits

  • Competitive interest rates for qualified borrowers
  • Down payments as low as 3% for first-time homebuyers
  • No upfront mortgage insurance premium
  • PMI can be removed once you reach 20% equity
  • Available for primary residences, second homes, and investment properties
  • Higher loan limits in expensive areas (conforming jumbo loans)
  • Flexible loan terms (10, 15, 20, 30 years)
  • Can be used for purchase or refinance

Requirements

  • Minimum credit score of 620 (higher scores get better rates)
  • Down payment of at least 3% (20% to avoid PMI)
  • Stable employment history (typically 2 years)
  • Debt-to-income ratio typically below 43%
  • Proof of income and assets
  • Property appraisal required
  • Private mortgage insurance (PMI) required if down payment is less than 20%

Frequently Asked Questions

What is the difference between conventional and government-backed loans?

Conventional loans are not insured by government agencies like FHA, VA, or USDA loans. This means they typically have stricter credit requirements but often offer better rates for qualified borrowers and more flexibility in terms.

How can I avoid paying PMI?

You can avoid PMI by making a down payment of 20% or more. If you put down less than 20%, you can request PMI removal once your home equity reaches 20% through payments or appreciation.

What are conforming loan limits?

Conforming loan limits are the maximum loan amounts that Fannie Mae and Freddie Mac will purchase. For 2024, the baseline limit is $766,550 for most areas, but can be higher in expensive markets.

Can I use a conventional loan for an investment property?

Yes, conventional loans can be used for investment properties, though they typically require a higher down payment (usually 20-25%) and may have slightly higher interest rates than owner-occupied properties.

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