Conventional Loans

A conventional mortgage is a home loan that is not insured or guaranteed by a government agency such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). Instead, conventional mortgages are backed by private lenders, such as banks or mortgage companies.

Conventional mortgages are best suited for borrowers who have good credit, a stable income, and a down payment of at least 5% to 20% of the purchase price of the home. These loans typically have more stringent credit requirements than government-backed loans, and borrowers with a lower credit score may be required to pay a higher interest rate or provide a larger down payment.

One advantage of a conventional mortgage is that borrowers can often avoid paying mortgage insurance if they make a down payment of at least 20% of the home's purchase price. In contrast, borrowers with an FHA loan are required to pay mortgage insurance premiums for the life of the loan, regardless of the size of their down payment.

Conventional mortgages are available for a variety of property types, including single-family homes, multi-unit properties, and condominiums. The loan limits for conventional loans are set by the Federal Housing Finance Agency (FHFA) and vary by location.

Overall, conventional mortgages are a good choice for borrowers who have a strong financial profile and are looking for a loan with competitive interest rates and flexible terms.