A conventional home loan, also called a conventional mortgage, is a common loan type that is often one of the least complicated and most flexible home buyer loan options. Conventional loans offer low down payment options to buyers with strong credit, typically around 3-5%, and allow for 15 or 30-year fixed loans.
Conventional loans are less complicated for mortgage underwriting and mitigate potential appraisal issues. Conventional loans work best for buyers intending to purchase a primary home, secondary home, or investment property and for homebuyers who have a well-balanced income-to-debt ratio. Conventional loans offer fixed interest rates, 10, 15, 20, and 30-year terms, as well as loans of up to $1,000,000.00.
Unlike VA and FHA loans, conventional loans are not backed by a government agency. They often follow the income and down payment requirements set by Fannie Mae and Freddie Mac and adhere to the Federal Housing Financing Administration (FHFA).
Homebuyers with a strong credit score of at least 620 are the best candidates for a conventional home loan, but the higher a buyer’s credit score, the better chance of getting a lower loan rate.
Benefits of a Conventional Mortgage
Many home buyers like the benefits of conventional loans because they allow them the freedom to purchase various property types like primary homes, secondary homes, and investment properties. Conventional loans also allow homeowners to cancel required mortgage insurance once their loan balance is below 78% of the home’s value, choose 1 of 4 term options, and have low down payment options.
Conventional Home Loan Details
- 620 minimum credit score
- Multiple property options
- $647,200.00 max loan amount
- 3-5% down payment options
- 10, 15, 20, and 30-year fixed loans
- Private mortgage insurance is required for less than 20% down
If you are interested in applying for a Conventional Home Loan with The Mortgage Firm North Central Florida, make sure to view our loan checklist and contact us with any further questions!