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Conventional Mortgage

Conventional Mortgage

"Conventional mortgage" or "conventional loan" is a term you'll always encounter when shopping for a mortgage. After all, this common mortgage type is provided by most lenders.

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What Is a Conventional Mortgage or Loan?

A conventional mortgage or conventional loan is any home buyer's loan that is not provided or secured by a government entity. Rather, conventional mortgages are available through private lenders, such as banks, credit unions, and mortgage companies.

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20% Down payment
Perfect Credit
Interest Rates
Finding A House
30-Year Fixed-Rate Mortgages

20% Down payment

Myth

You need 20% down to purchase a home.

Fact

This isn't true. If you take out a conventional loan, you can buy a home with as little as 3% down.

Perfect Credit

Myth

You must have perfect credit to qualify for a mortgage.

Fact

Credit plays a significant role in your ability to get a home loan. However, this doesn’t mean you need perfect credit to buy a home.

Interest Rates

Myth

Mortgage interest rates are the same no matter what lender you work with.

Fact

The truth is that rates can vary from lender to lender. So for your financial safety, you should shop around when looking for a mortgage loan.

Finding a house

Myth

Find a house, then worry about a mortgage.

Fact

This is terrible advice at any time, but in a hot seller’s market like today’s, believing this myth can lead you to miss out on a home altogether.

30-Year Fixed-Rate Mortgages

Myth

A 30-year fixed-rate mortgage is always the best choice

Fact

If you can afford higher payments, you can own your home outright in less time and for less money with a 15-year fixed-rate mortgage.

What kinds of Conventional Loans are available?

Conventional mortgages fall into "conforming" and "nonconforming" loans.

Conforming loans observe the guidelines set by Fannie Mae and Freddie Mac, two government-sponsored establishments that fund the U.S. housing market. The best-known regulation has to do with the size of the loan. In 2022, the conforming loan limitation for single-family homes in most continental U.S. is $647,200. Higher-cost areas, such as Hawaii and Alaska, have greater limits, up to $970,800 for single-family homes.

Many nonconforming loans are jumbo loans for home buyers who need to borrow an amount higher than the conforming limit for the area.

Other nonconforming loans include those made to borrowers with poor credit, high debt or a recent bankruptcy, or homes with a high loan-to-value ratio (usually up to 90% for a conforming loan).

Can I get down payment assistance with a Conventional Loan?

Yes, you may be able to qualify for down payment assistance with a conventional home loan. In addition, government agencies and community programs offer services to buyers struggling with complex financial situations, no matter what type of financing they use.

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