WHAT IS A CONVENTIONAL LOAN?

A conventional mortgage loan is a mortgage loan that is NOT backed or insured by FHA, VA or USDA. Conventional loans are traditional loans that usually adhere to the guidelines set by Fannie Mae and Freddie Mac (Government-Sponsored Entities).

AM I THE RIGHT FIT FOR A CONVENTIONAL LOAN?

Conventional loans can be a great option for some borrowers. The minimum credit score required for a conventional loan is 620, the maximum debt-to-income ratio is typically 36% and conventional loans only require a minimum down payment of 3%-5%. However, just because you meet this criteria does NOT mean it is the best loan option for you. Additionally, even with a 620 credit score, there is no guarantee you will be approved and the lower credit score you have, the more compensating factors in your loan application you will need. Lastly, if you are putting less than 20% down on conventional mortgage, you are required in most cases to pay private mortgage insurance. Conventional private mortgage insurance is determined via a risk-based algorithm. With that being said, if you have a below average credit profile, the private mortgage insurance on a conventional loan may be more expensive rather than some other loan types. The best way to determine if you are a good fit for a conventional loan would be too schedule a consultation with a certified mortgage planner. You can contact us too schedule an appointment here!

CONVENTIONAL LOAN TIPS:

Do not avoid a conventional loan even if you don’t have 20% down

Do not avoid a conventional loan if you are a first time home buyer. (There is great first time buyer programs with conventional loans!)

If required to pay monthly private mortgage insurance, remember that you can request from your servicer to remove the PMI once you house is worth 80% of the balance!

Too see if a conventional loan is a good option for you, click here to schedule a consultation with a certified mortgage planner.

*Please visit our Disclosures page for more details for all loan types.