Loan Types

A conventional mortgage is one that’s not guaranteed or insured by the federal government. A 20% or higher down payment provides access to the best rates and most options. However, Down Payment Assistance (DPA) may be available for those that qualify for as low as 1%. Housing Counseling Services are available. The nationwide network of HUD participating housing counseling agencies has been helping consumers across America for more than 50 years by providing the answers they need to make informed housing decisions.

 

Most conventional mortgages are “conforming,” which simply means that they meet the requirements to be sold to Fannie Mae or Freddie Mac. Fannie Mae and Freddie Mac are government-sponsored enterprises that purchase mortgages from lenders and sell them to investors. This frees up lenders’ funds so they can get more qualified buyers into homes.

 

Conventional mortgages can also be non-conforming, which means that they don’t meet Fannie Mae’s or Freddie Mac’s guidelines. One type of non-conforming conventional mortgage is a jumbo loan, which is a mortgage that exceeds conforming loan limits. Investors may also want to qualify based on the property's cash flow or fix & flip investment property.

 

Because there are several different sets of guidelines that fall under the umbrella of “conventional loans,” there’s no single set of requirements for borrowers.  Conventional loans have stricter credit requirements than government-backed loans like FHA loans. In most cases, you’ll need a credit score of at least 620 and a debt-to-income ratio of 50% or less. Even if your credit is less than perfect, our personalized service means you may be eligible with a credit score as low as 500.