Conventional or conforming loans refer to most mortgages not backed by the federal government. These loans follow the terms and conditions set by Fannie Mae and Freddie Mac, government-sponsored institutions that are the largest purchasers of mortgages in the United States.
A conventional mortgage comes with stricter approval standards than government loans, so it’s generally best for borrowers that have a higher credit score, stable employment and income, and a debt-to-income ratio of less than 45%.
A common misconception about conventional mortgages is that a 20% down payment is required. However, down payment requirements may vary based on your situation. A lower down payment of 3% is possible in combination with paying for private mortgage insurance (PMI), which is included in your monthly mortgage payment.
A conventional loan could be your best bet for a mortgage if you’re a borrower with higher credit. By having a higher credit score, you may be able to take advantage of additional conventional loan benefits, like competitive pricing, no mortgage insurance if you put at least 20% down, or the option of a lower down payment in combination with mortgage insurance.
Primis Mortgage Company (“Primis Mortgage”) is a subsidiary of Primis Bank, a Member FDIC. Primis Mortgage NMLS #1894879 | BK #1042893 | ML #1894879 (www.nmlsconsumeraccess.org). As always, all loans are subject to credit approval and product guidelines. Terms and conditions apply. *Active duty, retired, or honorably discharged members of the military or their surviving spouses are eligible for the VA loan.Terms, conditions, and restrictions may apply. Loan products are subject to availability and credit approval. Not a commitment to extending credit. | Mortgage Company Complaint