Conventional Mortgage

conventional mortgage

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Conventional Loans

Conventional loans are mortgage options not backed by a government agency. They are broken down into conforming loans, which have a maximum loan amount prescribed by the federal government, and non-conforming loans, which vary by lender.

Benefits include the option to avoid private mortgage insurance (PMI) by putting at least 20% down, as well as more flexible loan requirements.

If you feel you are a good candidate for a conventional loan, or if you would just like to learn more about them, we encourage you to reach out to one of our dedicated Mortgage Advisors.

While everyone’s situation is different, we take special care to guide you toward the right mortgage product to meet your needs!

Find a Mortgage Advisor ›

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What is it?

  • 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 requires PMI (Private Mortgage Insurance) when a buyer is not able to put at least 20% down.
  • Additionally, guidelines are less stringent regarding property condition, and gift funds may also be used to offset down payment.

Who can it help?

  • Individuals with a credit score of 620 or higher, and with income and assets that can be verified.
  • Usually, the buyer must have enough in reserves (money in savings accounts and/or investments) to cover down payment and closing costs.*
  • Traditionally, conventional loans have some of the lowest interest rates if qualifications fit the guidelines.*

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Types of Conventional Loans

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HomeStyle

What is it?

  • Long-term renovation loan used to purchase, refinance or renovate a property.
  • Backed by Fannie Mae and available to owner-occupied homeowners, as well as for second homes and single-family investment properties.
  • For buyers unable to put 20% down, mortgage insurance premiums discontinue when the mortgage balance is 78% of the property value.

Who can it help?

  • Individuals looking to purchase or refinance a property that needs renovation.
  • Individuals who have the qualifications that meet conventional guidelines.

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HomePossible

What is it?

  • Specialized mortgage product offered by Freddie Mac created for low to moderate-income families.
  • Buyers are required to invest as low as 3% down on a home purchase.
  • Furthermore, HomePossible allows for as little as 5% down when purchasing a 3-4 family property that you intend to occupy.
  • Gift funds can cover 3% of the down payment.

Who can it help?

  • One of the defining factors of HomePossible mortgages is that there are income limits when going through the qualification process.
  •  Is certainly a great alternative to FHA, and ideal if you intend on living in a multi-family home that generates income.
  • Furthermore, if you are a “Do it yourself” kind of person, and you are concerned about having enough money down to afford a new home, this program could certainly be perfect for you and your family. 

NOTE: HomePossible is the best option for a low down payment when purchasing an owner- occupied multi-family home.

Learn More

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HomeReady

What is it?

  • The HomeReady mortgage is a conventional mortgage product offered by Fannie Mae that helps low to moderate income buyers purchase or refinance a home.
  • The advantages of this mortgage product include a lower down payment and credit requirement, additionally, decreased mortgage insurance rates.
  • As a result, HomeReady allows for family and friends to act as a co-signer for qualification if the primary borrower(s) are consequently unable to qualify independently.
  • Even more, the buyer does not have to be a first time home buyer to qualify for a HomeReady loan.
  • Additionally, income from boarders and accessory units (in-law apartments) is allowed for qualification.

Who can it help?

  • One of the defining factors of HomeReady mortgages is the income limits while going through the qualification process.
  • Individuals looking to buy a home with lower income and credit qualifications, or those who have a family member or friend willing to help to qualify for financing.
  • Additionally, a great alternative to an FHA loan.

Learn More

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To view our list of loan programs, click here.

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