Conventional Loans

This is possibly the most common Mortgage Loan, typically best fits consumers who have a solid credit history & offering a down payment of at least 5% (3% for First Time Home Buyers). Worth mentioning that if there is a down payment of 20% or more there is no Mortgage Insurance required. Conventional Mortgage Loans are not backed by a government agency instead they are secured by Government sponsored Enterprises such as Fannie Mae & Freddie Mac. These loans must follow the guidelines & meet the down payment, income & credit score requirements set by Fannie Mae & Freddie Mac. Must also Conform to loan limits which typically vary based on Zip Code &/or County but these are followed by Fannie & Freddie but are set by the Federal Housing Finance Administration (FHFA). Conventional Loans are viewed as much riskier loans because they are not backed/secured by the Government.

There are 2 types of Conventional Loans:

  • Conforming:
    As mentioned Conforming Loans must meet the same Guidelines & Loan Limits Fannie & Freddie are required to follow.
  • Non-Conforming:
    Described as Mortgage Loans that exceed the Zip Code/County loan limits.