Conventional Loans

What are Conventional Loans?

Conventional loans are mortgage loans that are not insured or guaranteed by a government agency, such as the FHA, VA, or USDA. These loans are offered by private lenders and typically require higher credit scores and down payments. Conventional loans come with flexible terms and competitive interest rates, making them a popular choice for borrowers with strong financial profiles. These loans can be used for primary homes, secondary residences, or investment properties.

Are Conventional Loans Right for You?

Conventional loans are ideal for borrowers with good to excellent credit, stable income, and a down payment saved up. These loans are a great option for homebuyers looking for competitive interest rates and flexible loan terms. If you have a strong financial profile and are not looking for government-backed loan programs, a conventional loan could be a good fit for you.

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Eligibility Requirements

To qualify for a conventional loan, you must typically meet the following requirements:

Minimum Credit Score

A credit score of at least 620 is generally required, though higher scores may qualify for better rates.

Down Payment

A down payment of at least 3% is required for some loan types, though putting down 20% or more can help you avoid private mortgage insurance (PMI).

Debt-to-Income Ratio

A maximum debt-to-income (DTI) ratio of 43%, though some lenders may allow higher ratios with compensating factors.

Stable Employment and Income

Proof of steady income and employment history is required to ensure you can make consistent mortgage payments.

Private Mortgage Insurance (PMI): 

Required if your down payment is less than 20%, though PMI can be canceled once you reach 20% equity in the home.

Conventional Loans

Numbers at a Glance

Here’s a quick overview of key numbers associated with this type of loans

Minimum Credit Score

620

Varies by lender

Down Payment

3% to 20%

Varies by loan type

Maximum DTI Ratio

43%

Varies by lender

Loan Term

15 or 30

Years to payoff the loan

Upfront Mortgage Insurance Premium (UFMIP)

None

Depending on lender requirements

Annual Mortgage Insurance Premium (MIP)

Required

Only if down payment is less than 20%. paid as (PMI)

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We offer a variety of loan programs designed to meet the needs of every homebuyer.

Conventional Home Loan is perfect for you?

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Benefits of Conventional Loans

Lower Interest Rates for Good Credit

Borrowers with solid credit scores are often eligible for lower interest rates, which can result in significant savings over the life of the loan.

Flexible Loan Terms

Conventional loans offer flexible terms, including 15- or 30-year options, allowing borrowers to choose a loan term that best fits their financial goals.

No Upfront Mortgage Insurance

Unlike FHA or VA loans, conventional loans do not require an upfront mortgage insurance premium, reducing your overall loan costs.

Use for Various Property Types

Conventional loans can be used for a variety of property types, including primary residences, second homes, and investment properties.

Not the Loan You're Looking for?

Check out other loan options

Available to veterans and active-duty service members, VA loans provide excellent terms with no down payment required.

Backed by the Federal Housing Administration, FHA loans are perfect for first-time homebuyers or those with less-than-perfect credit.

Designed for higher-priced homes, jumbo loans offer financing options above conventional loan limits.

ARMs start with a lower fixed interest rate for an initial period, then adjust periodically based on market conditions.

These government-backed loans are tailored for rural and suburban homebuyers, often with zero down payment.

Pay only the interest on your mortgage for a set period, ideal for buyers who expect an increase in income or future refinancing.

Enjoy the security of a consistent interest rate and stable monthly payments for the life of your loan.

Flexible loans for borrowers who don’t meet standard lending criteria are ideal for those with irregular income.

Combines purchase and renovation costs into one loan, perfect for buyers looking to fix up a property.

Allows homeowners 62+ to access home equity without monthly payments, repaid when the home is sold or vacated.

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You can always ask for advice from a mortgage loan expert.

Conventional Loans FAQ's

Do I need a 20% down payment for a conventional loan?

No, while a 20% down payment helps you avoid private mortgage insurance (PMI), some conventional loans allow down payments as low as 3%

What is private mortgage insurance (PMI)?

PMI is required for conventional loans with down payments less than 20%. It protects the lender if you default on your loan, but it can be removed once you reach 20% equity in your home.

Are conventional loans only for primary residences?

No, conventional loans can be used for primary homes, second homes, and investment properties, offering flexibility for various property types.

Find Your Perfect Conventional Loan

First Finance Lending will guide you with expert advice and personalized service to start your homeownership journey with the perfect loan program.