Conventional Loan

Conventional loans are sometimes more lenient with the appraisal and condition of the property. When you are buying a "fixer upper" you may need to use a conventional loan. Homes purchased above the FHA loan limit are usually financed with conventional loans.

Conventional loans are not guaranteed or insured by the government. These are typically fixed in terms (10, 15, 20, 30 & 40 year) and rate. There are two types of conventional loans; conforming and non-conforming loans. Conforming loans fall within the maximum limits of set by the government i.e. less than about $700,000. Anything above the limit may be considered a “Jumbo Loan” and thus, non-conforming with government limits. These typically have higher rates and require more hoops to jump through for qualification.

Conventional loans are ideal for people with a good credit history, stable income, and at least 3% of the down payment. You will likely pay mortgage insurance if your down payment is less than 20%.