Loan Products

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Conventional loans are mortgage loans that are not insured or guaranteed by a government agency, such as the FHA or VA. They are typically offered by private lenders, and here are some key features:

1. Types: Conventional loans can be classified into two types:
   
   • Conforming Loans: These meet the guidelines set by Fannie Mae and Freddie Mac, including loan limits.
   • Non-Conforming Loans: These do not meet those guidelines and include jumbo loans, which exceed the conforming loan limits.

1. Down Payments: Conventional loans generally require a higher down payment than FHA loans, typically ranging from 3% to 20% of the purchase price, depending on the lender and borrower profile.
2. Credit Score Requirements: Borrowers usually need a higher credit score to qualify for a conventional loan compared to government-backed loans. With a removal of a minimum standard credit score to qualify as long as DU approved the file ; it is recommended a score of 620 or above is commonly required, though some lenders may allow lower scores.
3. Mortgage Insurance: If the down payment is less than 20%, borrowers will need to pay for private mortgage insurance (PMI) until they reach 20% equity in the home. Unlike FHA loans, PMI can be canceled once enough equity is built.
4. Interest Rates: Conventional loans may offer better interest rates than FHA loans for borrowers with strong credit profiles due to lower risk for lenders.
5. Use of Funds: The funds can be used for various purposes, such as purchasing a primary residence, a second home, or an investment property.