Conventional Loans

What Is a Conventional Loan?

A conventional loan is any type of home buyer’s loan that is not offered or secured by a government entity. They can be guaranteed by two government-sponsored enterprises; the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).  That is the reason why they might have stricter lending requirements. 

Conventional mortgages typically have a fixed rate of interest, which means that the interest rate does not change throughout the life of the loan. 

Requirements for a conventional loan

• Credit score of at least 620.
• Debt-to-income ratio of no more than 45%
• Minimum down payment of 3%, or 20% with no PMI.
• Property appraisal verifying the home’s value and condition.