Key Features:

Conventional loans come in two main types: conforming and non-conforming. Conforming loans adhere to the limits set by the Federal Housing Finance Agency (FHFA), making them eligible for purchase by Fannie Mae and Freddie Mac. Non-conforming loans exceed these limits and often cater to borrowers with unique financial situations.

Borrowers can select from fixed-rate or adjustable-rate mortgage options, typically with terms ranging from 10 to 30 years. Fixed-rate loans provide consistent monthly payments, while adjustable-rate loans may start with lower initial rates that adjust periodically.

Advantages:

• No upfront mortgage insurance premium (required by FHA loans).
• Potentially lower interest rates for borrowers with strong credit.
• Wide range of property types, including primary residences, vacation homes, and investment properties.

Requirements:

• Credit score of 620 or higher (varies by lender).
• Debt-to-income ratio generally below 45%.
• Down payments as low as 3% for first-time buyers, though putting 20% down can eliminate private mortgage insurance (PMI).

Ideal For:

Conventional loans suit financially stable borrowers who can make larger down payments and want to avoid long-term mortgage insurance costs. With their flexibility, these loans remain a cornerstone of home financing for buyers nationwide.