Conventional Loans

Conventional loans are also known as a QM (Qualified Mortgages)

A conventional property loan is a highly customizable loan with a flexible rate, a flexible term, and a flexible application. Sometimes called a conforming loan, this type of loan is the industry standard for mortgages. Depending on the type of mortgage you need, you can take out a shorter or longer term loan at either a fixed or adjustable rate. Use a conventional loan to pay for a any residential property including a primary home, a second home, or an investment property.

 

Fixed 30-Year Mortgage

Most people choose to pay for their homes with a fixed 30-year mortgage. Longer term loans, like a 30-year mortgage, are popular with homeowners because their monthly payments are lowest.

The only disadvantage to a long-term loan is that, if you select this type of loan, you will end up paying more in interest overall than you would have with a comparable short-term loan.

Fixed 30-Year Mortgage Quick Facts:

Down Payment As low as 3%
Qualifying Credit As low as 620
Debt-to-Income Up to 50%
Gift Payments Allowed, but family restrictions apply
Rate and Term Either fixed or adjustable
Ceiling $417,000
Occupancy Primary home, second home, or investment property
Mortgage Insurance Not required (with 20% down payment)
 

Fixed 15-Year Mortgage

 

A fixed 15-year mortgage is, in many ways, similar to a fixed 30-year mortgage. The down payment and interest rates, for example, are often the same. If you choose a 15-year mortgage, however, you will end up paying higher monthly payments. The advantage, of course, is that you’ll likely end up paying thousands or tens of thousands of dollars less in interest over the life of the loan.

If you’re doing well and looking to refinance your house to pay it off sooner, a fixed 15-year mortgage is often your best option. Many homeowners switch from 30-year to 15-year loans when they realize how much money doing so can save them.

 

Home Renovation Loan

If you’re borrowing money to add value to your home through repairs and renovations, you can easily bundle a home renovation loan into your existing mortgage payment. These loans give homeowners access to funds for projects that increase the value of their asset.

As a homeowner, you can refinance your mortgage for all kinds of home improvement including hardscaping, renovating a kitchen or bathroom, adding an addition, repairing structural flaws, improving energy efficiency, and adding cosmetic details.

Major Conventional Mortgage Loan Providers

The government-backed mortgage loan providers Fannie Mae and Freddie Mac offer conventional mortgage loans at competitive rates. While they offer comparable down payments and qualifying credit scores, the two providers differ in a few ways.

Here are the fast facts about each major mortgage loan provider:

Freddie Mac

Down payment on a primary residence with up to 4 units As low as 3%
Down payment on a second home As low as 10% with private mortgage insurance (PMI)
Down payment on an investment property As low as 15% with PMI
Short-term rental properties Not allowed
Qualifying credit score As low as 630
Non-occupant co-borrower Allowed
Gift payments Allowed
Down-payment assistance Available for first-time home buyers
Cash-out refinance Up to 80% of property value
Private mortgage insurance (PMI) Low

Fannie Mae

Down payment on a primary residence with up to 4 units As low as 3%
Down payment on a second home As low as 15% with private mortgage insurance (PMI)
Down payment on an investment property As low as 15% with PMI
Short-term rental properties Allowed
Qualifying credit score As low as 620
Non-occupant co-borrower Allowed
Gift payments Allowed
Down-payment assistance Available for first-time home buyers
Cash-out refinance Up to 80% of property value
Private mortgage insurance (PMI) Low