Loan Options
Conventional loans, in plain English.
A conventional home loan follows the lending guidelines set by Fannie Mae and Freddie Mac. Unlike VA or FHA loans, it carries no government insurance. Because of that, lenders look for stronger credit and a solid financial profile. For the right borrower, a conventional loan is one of the most flexible and competitive mortgage options available.
Check If You QualifyLenditHome Powered By Alpha Home Lending, Inc.
Serving Utah, Florida, Idaho, Pennsylvania, and Texas.
General guidelines for conventional loans.
Every scenario is unique. These are the guidelines conventional loans generally work best with.
Credit
Good to excellent credit works best. Most conventional borrowers land at 660 or higher. Automated underwriting approvals have occasionally been seen with scores as low as 600, but those scenarios typically require additional review.
Income
Stable and consistent income matters. Lenders want to see that your income is steady and likely to continue.
Down Payment
Most buyers put 5% down. Some first time buyer programs allow as little as 3% down for qualified borrowers.
Debt to Income
Below 50% is the target. Your monthly debts divided by your monthly income should stay under half. Run your numbers on our debt to income calculator.
Who conventional loans are best for.
A conventional mortgage is often a strong option if this sounds like you.
- You have a solid credit history. Stronger credit unlocks the most competitive options.
- You can contribute a down payment. Money down lowers your loan amount and your payment.
- You want competitive long term options. Conventional loans are built to compete over the full life of the loan.
- You want flexibility. Conventional loans allow flexible property types and terms.
Benefits of conventional loans.
The advantages add up for qualified borrowers.
Mortgage Insurance You Can Remove
It does not have to last forever. Once you build sufficient equity, mortgage insurance can come off a conventional loan.
Lower Monthly Mortgage Insurance
Often lower than FHA. Conventional mortgage insurance typically costs less each month than FHA mortgage insurance.
Flexible Property Types and Terms
More properties qualify. Conventional guidelines cover a wide range of homes and loan terms.
A Straightforward Approval Process
Strong files move cleanly. When your financial qualifications are strong, the path to approval is direct.
Things to consider.
There is no government insurance behind this loan. Lenders generally require stronger credit profiles for the best interest rates, follow stricter qualification guidelines, and evaluate income and debt ratios carefully. For some borrowers, an FHA or VA loan may offer easier qualification.
Check your debt to income ratio.
Conventional loans look hard at your debts compared to your income. Run the calculator and see your ratio the way an underwriter will.
Run the Debt to Income CalculatorReady to see if you qualify?
Every borrower's situation is different. Run a quick scenario and see which loan programs may fit, along with what your estimated payment could look like. It takes just a couple of minutes.
Check If You QualifyPrefer to talk? Call Austin at (208) 821-0687.