What is a Conventional loan?
A conventional mortgage refers to a loan that is a non-government loan that meets requirements set by the Federal Housing Finance Agency (FHFA) and meets the funding criteria of Freddie Mac and Fannie Mae. Conventional loans are designed for good-to-great credit and income consumers. Conventional mortgages offer low interest rates to borrowers with excellent credit scores. For loans with ha 20% down payment, there is no mortgage insurance required.
Who qualifies for a conventional loan?
- Homebuyers with good credit (min credit score is 620)
- A qualifying debt-to-income ratio- you should be under 43%
- Homebuyers who do not need to borrow more than their county limits
Benefits of a Conventional Loan:
- No upfront mortgage insurance fee
- Better options to avoid costly monthly mortgage insurance
- Both fixed-rate and adjustable-rate options
Conventional Mortgages are great it you have a higher credit score, cash assets saved, and meet the debt-to-income ratio.