What is a Conventional Loan?
Conventional loans are mortgage loans offered by non-government sponsored lenders. A conventional, or conforming, mortgage adheres to the guidelines set by Fannie Mae and Freddie Mac. It may have either a fixed or adjustable rate.
While many think that a 20% down payment is required for all conventional loans, many lenders now offer low down payment options.
A conventional loan is a mortgage that is not guaranteed or insured by any government agency, including the Federal Housing Administration (FHA), the Farmers Home Administration (FHA) and the Department of Veterans Affairs (VA). It is typically fixed in its terms and rate.
- For purchases, at least one occupant must be a first time home buyer.
- For refinances, the loan being refinanced must be currently owned by Fannie Mae.
Advantages of a Conventional Loan
- Low interest rates
- Faster loan processing than an FHA
- Variety of down payment options, starting as low as 3% of the home’s sale price
- Various term lengths ranging from 10 to 30 years, on a fixed-rate mortgage
- Reduced private mortgage insurance (PMI)
Eligibility and Requirements
Conventional loans generally require that you have a FICO credit score of at least 620 to qualify, and a higher credit score is needed to qualify for the best interest rates
How do you Qualify for an Conventional Loan?
With Mortgage Experts, we know all about Conventional loans and can see if it the right option for you. If you are located in the DC Metropolitan area, please contact us today to get started.