Conventional loans

Conventional loans are backed by private lenders, instead of a Government agency.

Conventional loans are also called conforming mortgages, because they conform to guidelines by Fannie Mae and Freddie Mac. These entities buy mortgages from lenders and sell them to investors, which allows mortgages to be more widely available.

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Reasons to choose conventional loans

  • Flexible qualifications
  • Less costly mortgage insurance
  • No penalties for low down payments
  • Fewer steps to closing, resulting in lower closing costs
  • Available for second homes and investment properties (unlike some of the other loans)

  • qualifications

    • Minimum down payment of 5%-20%
    • Minimum credit score typically between 620-640
    • Total debt to income ratio under 45%
    • Housing debt to income ratio under 35%
    • No recent major derogatory credit - such as bankruptcy, foreclosure or short sale
    • Ability to verify your down payment and get funds from an allowed, documented asset source
    • Verifiable income, typically 2 years worth, with exceptions for recent graduates and other major life events

    conventional LOANS PROS & CONS

    • PMI cancels when the LTV reaches 78%

      Private Mortgage Insurance (PMI) goes away when your mortgage’s Loan-to-Value ratio is 78%, saving you from having to make additional insurance payments

    • Rate Flexibility

      Adjustable-rate and fixed-rate loan terms available

    • Higher down payment

      5%-20% down payment requirement

    • Qualifying guidelines are more strict

      See qualifications in the section above

    • Low income borrowers may not qualify

      Strict qualifications make this option unavailable to those with low income


    Speak with a Dedicated Mortgage Specialist

    Schedule a call or meeting to learn more. Or call us today at 800-764-9072!

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