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 Conventional Loans
What are Conventional Loans and Conforming Loans?
By definition, a Conventional Home Mortgage Loan is any mortgage that is not guaranteed or insured by the federal government. A conventional loan is generally referring to a mortgage loan that follows the guidelines of government sponsored enterprises (GSE's) like Fannie Mae or Freddie Mac. Conventional house loans may be either "conforming" and "non-conforming". Conforming loans follow the terms and conditions set by Fannie Mae and Freddie Mac. Nonconforming loans don't meet Fannie Mae or Freddie Mac guidelines, but they are also considered conventional.
What are the advantages of Conventional Loans versus other types of loans?
 Conventional Mortgage Loans are Ideal for Borrowers with Excellent Credit and a Substantial Down Payment
Conventional Loan requirements are more credit score driven than other loan types and at least a 620 FICO score is required to obtain an approval through ENG Lending's conventional loans. Conventional Loan guidelines are currently written in a way that a borrower with a 740+ credit score can usually obtain the best interest rate possible. As a borrowers credit score decreases below a 740, sizable fees and rate increases could be added, in excess of the 1-2 percent range. If your credit score is less than perfect, an FHA Loan, USDA Loan or VA Loan could be a better fit for you.
Conventional Loans Can Usually be Obtained With Less Hassle
Conventional mortgages generally have fewer underwriting hurdles than FHA, VA or USDA Loans, which can take longer to process because of the extra guidelines and procedures.
Conventional Mortgages Can Build Equity Faster
Because Conventional Loans usually require a higher down payment (usually 5% - 20%) than the other loan types, home equity can build quicker.
What factors determine if I am eligible for a Conforming Loan?
To be eligible for a Conforming Loan, your monthly housing costs (mortgage principal and interest, property taxes, and insurance) must meet a specified percentage of your gross monthly income. Your credit background will be fairly considered. At least a 580 FICO credit score is required to obtain an Conventional Conforming Loan Approval through ENG Lending. You must also have enough income to pay your housing costs plus all additional monthly debt.
See more on Conforming Loan Requirements.
What is the maximum amount that I can borrow?
The maximum amount for Conventional Home Mortgage Loans is determined by:
Maximum Loan Amount: The maximum house loan amount allowed for an Conventional Conforming Loan varies from county to county. The highest maximum Conventional Conforming right now is $729,750. The lowest maximum Conventional Mortgage amount available in any county is $417,000. To see what the limit is in the county in which you're interested, visit the following site https://www.efanniemae.com/sf/refmaterials/loanlimits/. This site lists U.S. territories as well as states.
Maximum financing: Depending on the state where the property is located, the maximum Conventional Mortgage amount will be 80% - 95% of the appraised value of the home or its selling price, whichever is lower.
How much money will I need for the down payment and closing costs?
Conventional Mortgage Loans require the home buyer to invest at least 5% - 20% of the sales price in cash for the down payment and closing costs. If the sales price is $100,000 for example, the home buyer must invest at least $5,000 - $20,000.
What property types are allowed for Conventional Mortgages?
Conventional Mortgage Guidelines allow you to purchase warrantable condos, planned unit developments, modular homes, manufactured homes, and 1-4 family residences. Conventional Loans can be used to finance primary residences, second homes and investment property.
Can I get an Conventional Mortgage after bankruptcy?
Criteria for Conventional loan approvals state that if you have been discharged from a Chapter 7 bankruptcy for four years or more, you are eligible to apply for an Conventional mortgage. If you have had a Chapter 13 bankruptcy, it must be documented that the your credit reputation has been re-established for at least two years to be eligible for a Conventional Loan Application.
Learn more about Conventional Mortgages.
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Use our Loan Helper to help find the right mortgage for your situation.
 Why choose a Conventional Loan?
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Conventional Mortgages are ideal for borrowers with excellent credit and a substantial down payment.
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Conventional Loans use income expanded qualifying ratios.
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There are no prepayment penalties for an Conventional Conforming Mortgage.
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A Conforming Loan can be used for the purchase of a Primary Residence, Second Home or Investment Property. -
A Conventional House Loan is available all areas of the country, provided a market exists for the property and the home meets minimum property standards. -
A Conforming Loan may be used to purchase or refinance a new or existing one to four family home in urban and rural areas, including manufactured homes on permanent foundations. -
Conventional Mortgages are offered at terms of 10, 15, 20, 25, 30 and 40 years. The terms of 15 and 30 years often carry the lowest interest rates.
What types of Conventional Mortgages are available?
Fixed Rate Mortgage
Most Conventional Mortgages are fixed-rate mortgages. In a fixed rate mortgage, your interest rate stays the same for the entire loan period. With a fixed rate Conventional Mortgage, you always know exactly how much your monthly payment will be. Contact us for today's free Conventional mortgage rates.
Adjustable Rate Mortgage
With a conventional adjustable rate mortgage (ARM), the initial interest rate and monthly payments are low, but these may change during the life of the loan. Conventional Loans mainly use the Constant Maturity Treasury Index (CMT) or the London Interbank Offered Rate Index (LIBOR) to calculate the changes in interest rates. Conventional ARMS are offered with initial fixed rate periods of 3 years, 5 years, 7 years and 10 years.
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