Conventional Home Loans
Conventional Mortgage Loans
Conventional or conforming loans refer to most mortgages not backed by the federal government. These loans follow the terms and conditions set by Fannie Mae and Freddie Mac, government-sponsored institutions that are the largest purchasers of mortgages in the United States.
A conventional mortgage comes with stricter approval standards than government loans, so it’s generally best for borrowers that have a higher credit score, stable employment and income, and a debt-to-income ratio of less than 45%.
A common misconception about conventional mortgages is that a 20% down payment is required. However, down payment requirements may vary based on your situation. A lower down payment of 3% is possible in combination with paying for private mortgage insurance (PMI), which is included in your monthly mortgage payment.
Why Choose a Conventional Loan?
A conventional loan could be your best bet for a mortgage if you’re a borrower with higher credit. By having a higher credit score, you may be able to take advantage of additional conventional loan benefits, like competitive pricing, no mortgage insurance if you put at least 20% down, or the option of a lower down payment in combination with mortgage insurance.
What Are the Benefits of Conventional Loans?
- Competitive pricing
- No prepayment penalty ever
- No mortgage insurance option
- Up to 45% debt-to-income ratio
- Allows for 3% seller paid closing costs
What Are the Waiting Periods After a Hardship?
- Competitive pricing
- No prepayment penalty ever
- No mortgage insurance option
- Up to 45% debt-to-income ratio
- Allows for 3% seller paid closing costs
What Are the Most Common Conventional Loan Programs?
Conventional Purchase
- Loan amounts up to $647,000 in low cost areas: $947,800 in high cost areas
- 3%, 5%, 10%, or 20% or more down
- Do not need to be a first time buyer
- Available with or without mortgage insurance
Conventional Refinance
- Competitive interest rates
- Loan amounts up to $647,000 in low cost areas; $947,800 in high cost areas
- 30yr, 25yr, 20yr, 15yr, or 10yr
- Fixed or adjustable rates available
Conventional Cash Out
- Up to 80% LTV
- Competitive interest rates
- Payoff a 2nd mortgage or HELOC
- Cashout to pay off high interest debt
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GoRascal Inc. NMLS# 2072896 is licensed under the laws of the State of Texas and by state law is subject to regulatory oversight by the Texas Department of Banking - Division of Savings and Mortgage Lending. Texas Mortgage Banker Disclosure – Figure: 7 TAC 81.200(c) “CONSUMERS WISHING TO FILE A COMPLAINT AGAINST A MORTGAGE BANKER OR A LICENSED MORTGAGE BANKER RESIDENTIAL MORTGAGE LOAN ORIGINATOR SHOULD COMPLETE AND SEND A COMPLAINT FORM TO THE TEXAS DEPARTMENT OF SAVINGS AND MORTGAGE LENDING, 2601 NORTH LAMAR, SUITE 201, AUSTIN, TEXAS 78705. COMPLAINT FORMS AND INSTRUCTIONS MAY BE OBTAINED FROM THE DEPARTMENT’S WEBSITE AT WWW.SML.TEXAS.GOV. A TOLL-FREE CONSUMER HOTLINE IS AVAILABLE AT 1-877-276-5550. THE DEPARTMENT MAINTAINS A RECOVERY FUND TO MAKE PAYMENTS OF CERTAIN ACTUAL OUT OF POCKET DAMAGES SUSTAINED BY BORROWERS CAUSED BY ACTS OF LICENSED MORTGAGE BANKER RESIDENTIAL MORTGAGE LOAN ORIGINATORS. A WRITTEN APPLICATION FOR REIMBURSEMENT FROM THE RECOVERY FUND MUST BE FILED WITH AND INVESTIGATED BY THE DEPARTMENT PRIOR TO THE PAYMENT OF A CLAIM. FOR MORE INFORMATION ABOUT THE RECOVERY FUND, PLEASE CONSULT THE DEPARTMENT’S WEBSITE AT WWW.SML.TEXAS.GOV.”