CONVENTIONAL FINANCING
Conventional mortgage loan is a home loan that is not guaranteed or insured by the Federal Government. Conventional mortgages are usually backed by Fannie Mae or Freddie Mac and must conform to the requirements set forth by them. Conventional Loans requires a minimum down payments of at least 3% for qualified borrowers. Conventional loans do require private mortgage insurance but borrowers who put at least 20% down do not have to pay the mortgage insurance premium, which, no matter the loan to value is required with a FHA loans
About Conventional Financing.
- Credit scores start at 620
- No private mortgage insurance if your LTV is 80% or less
- Private mortgage insurance is not permanent
- Down payments as low as 3%
Conventional mortgages fall into two categories: “conforming” and “nonconforming” loans.
Conforming loans follow the guidelines with loan sizes. In 2019, the conforming loan limit for single-family homes in most of the continental U.S. is $484,350. Higher-cost areas, such as Hawaii and Alaska, have higher limits up to $726,525 for single-family homes.
Nonconforming loans, often called Jumbo Loans, are for borrowers who don’t qualify for a conforming loan because the amount is higher than the conforming limit for the area.