Conventional Loans
Conventional loans are any mortgage that is not guaranteed or insured by the federal government. Although a conventional loan is not insured or guaranteed by the government, it still follows the guidelines of government sponsored enterprises, Fannie Mae and Freddie Mac.
Conventional loans may be “conforming” and “non-conforming”. Conforming loans follow the guidelines set by Fannie Mae and Freddie Mac. These guidelines are updated annually, and state a maximum purchase amount for a first mortgage single-family dwelling. If the purchase is for a property that is either a two-family, three-family, or four-family dwelling, larger values apply before the loan is no longer considered a conventional loan.
Conventional Loans and Why You Would Use One
Benefits of a Conventional Loan
A common loan program suitable for individuals with credit scores above 740.
3% minimum down payment required.
Loan eligibility down to a 620-credit score.
Less strict appraisal requirements.
Standard debt to income ratio requirements.