Loan programs
Conventional loans
A conforming conventional loan follows Fannie Mae or Freddie Mac guidelines rather than a government program's. It is the most common mortgage in the country, and for many buyers it is the cheapest over the life of the loan.
Who it fits
- Buyers and owners with steady, documented income
- Credit in the fair-to-excellent range
- Primary homes, second homes and rentals
What to know
- Low down payment options exist for first-time buyers and for incomes under the area's limits.
- With less than 20% equity you pay private mortgage insurance. On most primary-home loans you can request cancellation at 80% of the original value, subject to conditions; automatic termination normally follows the scheduled 78% date if payments are current.
- Pricing moves with credit score and equity more than with almost anything else, so small changes to either can matter.
- Some counties have a higher conforming loan limit, so a larger loan there can still be conforming instead of jumbo.
What you'll need
- Two years of income history (pay stubs, W-2s or returns)
- Two months of bank statements
- A credit check
Questions
Conventional questions
Do I need 20% down for a conventional loan?
No. Twenty percent down avoids mortgage insurance, but conventional programs allow much less. The right amount depends on what you keep in savings afterward and how long you will own the home.
How is a conventional loan different from FHA?
FHA is more forgiving of lower credit scores and higher debt, but its mortgage insurance usually lasts longer. With good credit, conventional often costs less; with thinner credit, FHA often wins. Comparing both side by side settles it.
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