E360 MORTGAGE

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A conventional loan is a type of mortgage that is not insured or guaranteed by the federal government. These loans are offered by private lenders such as banks, credit unions, and mortgage companies. Conventional loans are popular because they offer flexible terms, competitive interest rates, and higher loan limits compared to government-backed loans like FHA, VA, and USDA loans.

1. Conforming Loans – Loans that meet the guidelines set by Fannie Mae and Freddie Mac, including loan limits and borrower qualifications. 2. Non-Conforming Loans (Jumbo Loans) – Loans that exceed conforming loan limits or have unique borrower requirements.

✅ Lower Overall Loan Costs ✅ Flexible Down Payment Options ✅ No Mortgage Insurance with 20% Down ✅ Competitive Interest Rates ✅ Higher Loan Limits ✅ No Property Restrictions

A conventional loan is a great option if you: ✔ Have a good credit score (620 or higher). ✔ Can afford a 3%-20% down payment. ✔ Want to avoid long-term mortgage insurance (by putting 20% down). ✔ Prefer flexible property choices without FHA restrictions.

Conventional Loan Requirements

Credit Score Requirements

  • Minimum Credit Score: 620 (Higher scores qualify for better rates)
  • Good Credit History: Lenders prefer borrowers with a stable credit history and low credit utilization.

Down Payment

  • 3% Down Payment: Available for first-time homebuyers or those with limited funds.
  • 5% – 20% Down Payment: Standard for most borrowers.
  • 20% or More: Eliminates the need for PMI.

Debt-to-Income (DTI) Ratio

  • Maximum DTI: 43%-50% (Lenders prefer a lower ratio, but exceptions can be made).
  • Your monthly debts, including mortgage payments, should not exceed this percentage of your income.

Employment & Income Stability

  • Steady Employment: A minimum of two years of employment history is typically required.
  • Proof of Income: Pay stubs, tax returns, and W-2s are needed for verification.

 

Loan Limits

  • The 2024 conventional loan limit for a single-family home is $766,550 in most areas but can be higher in expensive housing markets.

Private Mortgage Insurance (PMI)

  • Required if the down payment is less than 20%.
  • Can be canceled once equity reaches 20% or more, unlike FHA mortgage insurance, which lasts the life of the loan.