Conventional Loan
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What Is a Conventional Home Loan?
Conventional mortgages are the most common type of loan in the real estate industry. They are originated and funded by private lenders such as banks, mortgage companies, credit unions, and other financial institutions, and then are often sold to government-sponsored entities such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Conventional mortgages can be used for refinancing or new purchases, feature competitive rates, and offer terms ranging from five to 30 years.
Benefits of a Conventional Loan
Loan Requirements & Process
To receive all the benefits associated with a conventional loan, borrowers will have to meet certain basic requirements.
We accept credit scores as low as 620 for conventional loans. Individuals with higher credit scores are more likely to qualify for loans and may
qualify for loans with more favorable terms.
Although not all conventional loans require large down payments, the more money you put down, the lower your interest rate will likely be. We accept down payments as low as 3% for conforming loans
A conventional home loan has a lower debt to income ratio allowed than FHA. The total debt ratio limit is up to 50% with up to 20% down payment. (FHA can go up to 55% and sometimes higher).
Lenders will need to see proof that you can afford your mortgage payments. This may include employment verification, documentation of assets, gift letters, and more.
30-year FHA Fixed-Rate Loan: An interest rate of 4.25% (5.269% APR) is for the cost of 2.00 Point(s) ($4,070.00) paid at closing. On a $203,500 mortgage, you would make monthly payments of $1,133.41. Monthly payment does not include taxes and insurance premiums. The actual payment amount will be greater. Payment assumes a loan-to-value (LTV) of 74.91%. Payment includes a one-time upfront mortgage insurance premium at 1.75% of the base loan amount and a monthly mortgage insurance premium (MIP) calculated at 0.8% of the base loan amount. For mortgages with a loan-to-value (LTV) ratio of 74.91%, the 0.8% monthly MIP will be paid for the first 11 years of the mortgage term. Thereafter, the monthly loan payment will consist of equal monthly principal and interest payments until the end of the loan.
25-year FHA Fixed-Rate Loan: An interest rate of 4.25% (5.406% APR) is for the cost of 2.125 Point(s) ($4,324.38) paid at closing. On a $203,500 mortgage, you would make monthly payments of $1,234.38. Monthly payment does not include taxes and insurance premiums. The actual payment amount will be greater. Payment assumes a loan-to-value (LTV) of 74.91%. Payment includes a one-time upfront mortgage insurance premium at 1.75% of the base loan amount and a monthly mortgage insurance premium (MIP) calculated at 0.8% of the base loan amount. For mortgages with a loan-to-value (LTV) ratio of 74.91%, the 0.8% monthly MIP will be paid for the first 11 years of the mortgage term. Thereafter, the monthly loan payment will consist of equal monthly principal and interest payments until the end of the loan. 15-year FHA
Fixed-Rate Loan: An interest rate of 4.125% (5.353% APR) is for
the cost of 2.00 Point(s) ($4,070.00) paid at closing. On a $203,500 mortgage, you would make monthly payments of $1,591.37. Monthly payment does not include taxes and insurance premiums. The actual payment amount will be greater. Payment assumes a loan-to-value (LTV) of 74.91%. Payment includes a one-time upfront mortgage insurance premium at 1.75% of the base loan amount and a monthly mortgage insurance premium (MIP) calculated at 0.45% of the base loan amount. For mortgages with a loan-to-value (LTV) ratio of 74.91%, the
0.45% monthly MIP will be paid for the first 11 years of the mortgage term. Thereafter, the monthly loan payment will consist of equal monthly principal and interest payments until the end of the loan.
