Conventional Loan Definition
A conventional loan is a mortgage loan product used in financing real estate properties. This loan is the most common type of mortgage loan and is considered a conforming loan.
Conventional loans are not insured or guaranteed by a government agency. If a borrower puts less than a 20% down payment, the loan requires private mortgage insurance, commonly referred to as “PMI”.
Compared to VA, FHA and USDA loan products, conventional loans have stricter guidelines regarding credit scores, housing ratio and the debt-to-income ratio.
The minimum credit score is typically 620 but this varies by lender. For a first-time homebuyer, a conventional loan allows for a low-down payment of 3% which is a nice perk for first-time homebuyers.
Conventional Loan Meaning
Need assistance with a conventional loan? Feel free to reach out to Kristina.
Conventional Loan Lenders
When planning to take out a conventional mortgage to purchase a property, one needs to make sure they have an experienced lender who specializes in conventional loans. The truth is that while there are many lenders out there, the vast majority of them originate only a handful of conventional loans each year. This makes lenders susceptible to mistakes that often can be detrimental to a borrower. Therefore, borrowers must seek seasoned and highly experienced lenders to handle their conventional loan transaction. Luckily, at loanfully, we've built a comprehensive directory of industry's best mortgage lenders that specialize particularly in conventional loans.