What is a conventional mortgage?

Home Forums Mortgage What is a conventional mortgage?

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    Team StellarFi

    A conventional loan is not government-insured. Most conventional mortgages are offered by private lenders and meet the standards of government-sponsored enterprises Fannie Mae and Freddie Mac (hence, also known as conforming loans). Most people choose conventional loans which are either 15- or 30-year loan terms. The conforming loan limit for a single-family home is $726,200 in most states with Alaska and Hawaii being the exceptions.

    You may be able to get a conventional mortgage for a down payment as low as 3% depending on your financial situation and property type. You may also need to get private mortgage insurance if you make a down payment of less than 20%. You’ll need to have a credit score of at least above 620 to qualify for good rates. Your debt-to-income (DTI) ratio cannot exceed 50%, though having a lower DTI means better chances of approval. Conventional loans also have stricter credit score requirements than government-backed loans.

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StellarFinance, Inc. and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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