What is a conventional loan?

A conventional loan is a mortgage that is guaranteed or insured by either Fannie Mae or Freddie Mac. Conventional loans are either conforming or non-conforming. Conforming mortgages are required to conform to underwriting guidelines and loan limits set by Fannie Mae or Freddie Mac, whereas non-conforming mortgages have loan amounts higher than the loan limits set by Fannie Mae / Freddie Mac.

Conventional loans can offer the best interest rates and lowest fees, which can result in lower monthly payments. Most home buyers choose a fixed-rate over an adjustable-rate mortgage to avoid having to worry about fluctuations in mortgage rates, which makes budgeting much easier. They are typically considered to be the most common, stable, and safest type of loan.

Who can take advantage of conventional loans?

When applying for a conventional loan, you must meet three initial requirements:

  1. Be able to make a down payment
  2. Meet the minimum mid-FICO credit score requirement of 620
  3. Document stable income

Eligible properties for conventional loans include single-family homes, condominiums, multi-unit properties, and planned unit developments. If you have a decent credit score and available funds to make a down payment on an eligible property, it is likely you will qualify for a conventional loan.

Tips for taking out a conventional loan

RESEARCH. Before taking out a loan, be sure to speak with a licensed Loan Officer about the perfect loan for you. 

Contact Rene Ruiz today for any further information or questions about conventional loans!

CONVENTIONAL LOANS

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