Conventional Mortgage

What is it?

A conventional mortgage is a loan used to purchase or renovate a home, or refinance an existing property. Most conventional mortgages are called “conforming” mortgages as they usually fit the guidelines issued by Fannie Mae and/or Freddie Mac (also called Government Sponsored Agencies or GSE’s) that ultimately sell the mortgages to investors. Typically, conventional loan require PMI (Private Mortgage Insurance) when a buyer is not able to put at least 20% down. In addition, guidelines are less stringent regarding property condition, and gift funds may also be used to offset down payment.

Who can it help?

If you have a credit score of 620 or higher, and your income and assets can be verified, you may be a great candidate for a conventional mortgage. Usually, you must have enough in reserves (money in savings accounts and/or investments) to cover a down payment and closing costs. Traditionally, conventional loans have some of the lowest interest rates if your qualifications fit the guidelines.

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Types of Conventional Loans