A conventional mortgage loan is a type of loan that is not directly insured by a government program.
Conventional mortgages are available with several different term options with most people choosing between 15 and 30 year terms.
Conventional loans have stricter qualifying criteria compared to government backed mortgages like FHA, VA or USDA. This includes a higher credit score requirement. However, they are more flexible allowing for a low 3% down payment or larger loan sizes.
Conventional Loans come in two main types.
- Fixed Rate: Your interest never changes. You will have the same principal and interest rate for the length of the loan.
- Adjustable Rate: You will have a fixed introductory rate, after the rate changes at preset intervals based on an index rate plus a margin determined by the lender.
Conventional Loan Requirements
- Minimum credit score of 620.
- 45% Debt-to-Income Ratio.
- Typically between 15-20% downpayment