CONVENTIONAL LOANS

Ready. Set. Home.

PURCHASE A HOME WITH AS LITTLE AS 3% DOWN AND REDUCED OR NO MONTHLY MORTGAGE INSURANCE

Don’t let a big down payment keep you from purchasing your dream home

Down payments as low as 5% for current home owners or 3% for first time home buyers
Reduced or no monthly mortgage insurance
Usually a faster, smoother process with a lower monthly payment
Use gift funds for your entire down payment
Refinance your current mortgage with as little as 5% equity (regardless of current mortgage program)

Conventional mortgages are home loans that conform to the requirements set forth by Fannie Mae and Freddie Mac. They are not guaranteed or insured by the federal government
In general, conventional mortgage borrowers tend to have a secure financial standing, a low risk of defaulting, and typically make larger down payments
A conventional loan requires a minimum down payment of 5%
- 3% down is allowed for first time home buyers or income at or below the area median income
A majority of conventional borrowers put 20% or more down to avoid paying mortgage insurance
You can waive escrows with as little as 5% down payment which also significantly reduces monthly mortgage insurance and closing costs
There are two types of conventional mortgages:
- Conforming - loan amounts up to $647,200 for 2022
- Non-conforming - which include jumbo loans and special circumstances

Conventional loans may be utilized for primary or secondary residences, as well as investment properties
The maximum loan amount for conforming conventional mortgages is $647,200 for 2022, but the purchase price of the home may be higher. For example, $809,000 sales price with 20% down.

To be approved, you need good credit, a lower debt-to-income ratio, and circumstances that demonstrate your ability to pay your mortgage on time
The typical minimum credit score needed for a conventional loan is 680 but a credit score of 740 or above will help you achieve an elite interest rate. The higher the credit score, the more likely you are to get the lowest interest rate available
Conventional loans either require down payments of at least 5%. A down payment of 3% is available for first time home buyers or income at or below the area median income
- Borrowers who put down 20% or more do not have to pay monthly mortgage insurance
- Mortgage insurance can be cancelled on a conventional loan when the principal loan balance drops to 78% of the home’s value. This is not the case with FHA loans unless you put 10% down

A conventional loan has great benefits for borrowers with good credit and funds for down payment
- Fast approval, more flexibility, and less restrictions than some of the government-backed options
- Mortgage insurance on a conventional loan can be cancelled when your principal loan balance falls below 78% of the home’s value, which could significantly lower your monthly payment

Conventional loans can be harder to qualify for if you have a low credit score or high debt-to-income ratio. In that case, interest rates and mortgage insurance can be higher than government-backed loans