Conventional Loans

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Conventional loans

A Conventional loan is simply not a Government loan. Conventional loans comply with guidelines established by Fannie Mae or Freddie Mac. Fannie Mae, the Federal National Mortgage Association and Freddie Mac, the Federal Home Loan Mortgage Corporation, are publicly traded government-sponsored enterprises (GSEs). They buy mortgage loans originated by lenders, secularize, pool and sell them to investors in the open market as mortgage-backed securities. These are often the best option for borrowers with a strong credit history and who are able to put down a larger down payment.

 

Our Most Popular Home Loan Options

Conventional loan Features

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Down Payment

Conventional loans are available with as little as 3% down payment for creditworthy first-time buyers. Down-payment as low as 5% is typically an option for most other creditworthy buyers.

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Income

Income will be verified by reviewing recent pay check stubs from the past 30 days and tax returns and W2s for the most recent 2 years.

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Credit Score

Credit requirements are typically the most stringent on Conventional loans. The minimum credit score requirement is usually between 620-640 depending on the lender.

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Interest Rate

Interest rates are affected by the amount of the borrower’s down payment. Rates can be low on Conventional loans if your down payment is 20% or higher. Conventional loans can be either fixed-rate or adjustable-rate mortgages.

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Program ELIGIBILITY

Conventional loans have higher loan limits than most federal loans. To find out the current Conventional loan limit, click here. You may get a Conventional loan for most property types including owner occupied properties, a second home, and investment properties.

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Costs

A family member can provide gift funds of up to 100% of your closing costs and down payment. A borrower can also avoid PMI if they are able to put a down payment of 20% or higher. Bank statements will be verified to ensure the borrower has sufficient assets to close.

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In Conclusion

Conventional loans make up the largest portion of all home loans issued in the US. If you have a 20% down payment you can avoid mortgage insurance, which can save you thousands per year. Another benefit of Conventional loans is the variety of the loan term. Conventional loan lives can be between 10-30 year terms. With their higher credit score requirements conventional loans are more difficult for first-time home buyers and lower income individuals to qualify for.