Conventional Loan Description

What is a Conventional Loan?

A conventional loan is a popular mortgage option that is not insured or guaranteed by the government. Instead, it is backed by private lenders and follows guidelines set by Fannie Mae and Freddie Mac, two government-sponsored enterprises. Conventional loans are ideal for borrowers with strong credit, stable income, and a moderate down payment.

Key Features of Conventional Loans

• Flexible Terms: Choose from a variety of loan terms, typically 15, 20, or 30 years.

• Competitive Interest Rates: Enjoy lower interest rates compared to some government-backed loans, especially if you have a high credit score.

• Down Payment Options: As low as 3% for qualified buyers, though a 20% down payment can help you avoid private mortgage insurance (PMI).

• Loan Limits: Borrow up to $726,200 (2023 limit) for a single-family home in most areas, with higher limits in high-cost regions.

• No Upfront Mortgage Insurance: Unlike FHA loans, conventional loans do not require upfront mortgage insurance premiums.

Who is a Conventional Loan For?

Conventional loans are a great fit for:

• First-Time Homebuyers: With down payments as low as 3%, it’s an accessible option for those starting out.

• Repeat Buyers: Ideal for those looking to upgrade, downsize, or refinance.

• Borrowers with Strong Credit: Typically requires a credit score of 620 or higher, but better rates are available for scores above 740.

• Self-Employed Individuals: Flexible income documentation options make it easier to qualify.

Benefits of Choosing a Conventional Loan

• No PMI with 20% Down: Avoid private mortgage insurance by putting down 20% or more.

• Wide Range of Properties: Use a conventional loan to purchase primary residences, second homes, or investment properties.

• Refinancing Options: Easily refinance to lower your interest rate or change your loan term.

• No Government Restrictions: Unlike FHA or VA loans, conventional loans are not limited to specific borrower types or property requirements.

How to Qualify for a Conventional Loan

• Credit Score: A minimum score of 620 is typically required, but higher scores unlock better rates.

• Debt-to-Income Ratio (DTI): Your DTI should generally be below 43%, though some lenders may allow higher ratios with strong compensating factors.

• Down Payment: As low as 3% for first-time buyers, but a larger down payment can improve your terms.

• Income and Employment: Stable employment history and verifiable income are required.

Why Choose The Mortgage Solution for Your Conventional Loan?

At The Mortgage Solution, we make the conventional loan process simple and stress-free. Our team of experts, including Chuck Kan, Robert Jimenez,

Kevin Jannak, and Carlos Flores, will guide you every step of the way to ensure you get the best terms and rates for your dream home.

Ready to Get Started?

• Calculate Your Payments: Use our mortgage calculator to estimate your monthly payments.

• Get Pre-Qualified: Find out how much you can borrow in just minutes.

• Contact Us: Speak with one of our loan originators to explore your options.