Conventional Loans
Purchase with 3% or 5% Downpayment. No Mortgage Insurance with 11% Downpayment.
What is a Conventional Loan
A “Conventional” loan is a mortgage options that is not part of a specific government program. Conventional loans are also known as “Conforming Loans”. Conventional loans typically cost less than FHA Loans, but can be more difficult to get.
To finance a conventional loan, borrowers cannot exceed the maximum loan limit. The maximum loan limit for each individual county is determined by the FHFA (Federal Housing Finance Agency). For 2022, the maximum loan limit is currently set at $647,200 for most counties across the United States. In areas with a higher cost of living, loan limits are as high as $970,800. Homes loans that exceed the established county loan limit will typically require a jumbo loan option.
Conventional Loan Categories
There are two main categories of conventional loans:
- Conforming loans
Conforming loans have maximum loan amounts that are set by the government. Other rules for conforming loans are set by Fannie Mae or Freddie Mac. Fannie and Freddie are two companies that provide guarantees or backings for conforming loans.
- Non-conforming loans
Non-conforming loans are less standardized. Eligibility, pricing, and features can vary widely based upon lender requirements.
Mortgage insurance is required for some conventional loans.
Downpayment Options
- 3% Downpayment is available for the HomeReady and Home Possible mortgage programs. These mortgage options are designed to help serve credit-worthy low-income borrowers. These loan options are subject to income caps and property loan limits based on the County where the home will be purchased. There is also more flexibility for lower credit considerations.
- 5% Downpayment is available. Mortgage Insurance is most likely needed, unless an option to satisfy the mortgage insurance is selected.
- 11% downpayment is available without the requirement for Mortgage Insurance.
Disclaimer: Mortgage options are funded by 3rd party Lenders, and all underwriting requirements are based on 3rd party Lenders and Investors. Guidelines and mortgage options requirements and are subject to change. This is not a promise or commitment for a mortgage loan. Mortgage loan options may not be available in all States. For full licensing information, go to: www.nmlsconsumeraccess.org.
