Conventional Loan

Conventional Loan

What is a Conventional Loan?

Conventional means that a loan is not a part of a specific government program.  They can either be conforming or non conforming.

There are a lot of conventional loan products out there and finding the right one does not have to be difficult. Fannie Mae and Freddie Mac’s lending guidelines require a minimum FICO credit score of 620.  Conventional loans require no mortgage insurance if the loan to value is less than or equal to 80%.

Need a Fannie Mae or Freddie Mac approve/eligible per the Automated Underwriting System (AUS). A loan officer should run AUS before pre-approving a borrower for a loan in order to prevent any delays with the loan process.

Down Payment for Conventional Loans

The minimum down payment on a primary resident conventional loan is 3% for first time home buyers, which applies to home buyers that have not had ownership in a home in the last 3 years.  Home buyers who had ownership in a home in the past 3 years are required to put 5% down.

Conventional loans have stricter guidelines when it comes to credit and income than FHA loans, but allow borrowers to get loans for owner occupied and investment properties.  The appraisal guidelines for a conventional mortgage is more tolerant on property condition than FHA.

Conventional Loans and No Mortgage Insurance

Nationwide Mortgage & Realty has programs that do not require the borrower to pay separate mortgage insurance with a loan to value above 80%. Programs that do not require separate mortgage insurance can be either bought out or the program is called Lender Paid Mortgage Insurance (LPMI)

Conventional loans do not require the upfront mortgage insurance premium, which is currently 1.75 percent of the loan amount for an FHA loan.

Investment Property

For an investment property the minimum down payment for an investment property is 20%, but depends on if the property is single family or 2-4 units.

High debt to income? Self employed? We have programs that take investment experience and rent to the total payment into consideration. Do not need income. The property has to qualify based on cash flow for the Single Family Rental and Portfolio Loan program, which takes PITIA (principal, interest, taxes, insurance,

Qualifying for a Conventional Mortgage After Bankruptcy, Foreclosure, and Short Sale

  • The waiting period after a Chapter 7 or 11 bankruptcy discharge date for conventional loans is four years.
  • The waiting period after a Chapter 13 bankruptcy discharge is two years and four years from the dismissal date.
  • A Deed-in-Lieu, preforeclosure or charge-off of mortgage account has a 4 year waiting period.
  • A Foreclosure has a 7 year waiting period.
  • In the case that your mortgage debt was discharged in a bankruptcy, the bankruptcy waiting period is applies along as the appropriate documentation can be verified.

MGIC Calculator

Estimate mortgage insurance for conventional loans. This calculator is not an underwriting tool and is provided use for mortgage professionals. Even though in most cases it is accurate, results should not be relied upon for borrower qualification. Nationwide Mortgage & Realty, LLC is not affiliated with MGIC.

The general loan limits that apply to Conventional Mortgages delivered by Fannie Mae are published by the Federal Housing Finance Agency (FHFA). To look up loan limits for Conventional Mortgages: Click Here
To look up maximum base conforming loan limits delivered by Freddie Mac: Click Here

P&I Mortgage Calculator

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