Conventional Loans

Conventional Loans are mortgage loans that are not insured by the government (like FHA, VA, USDA Loans). Typically, conventional loans have better rates, terms and/or lower fees than other types of loans. However, conventional loans typically require a borrower to have good credit, reasonable amounts of monthly debt obligations, a down payment of 5-20% and reliable monthly income. Conventional loans are ideal for borrowers with excellent credit and at least a 5% down payment.

Common Types of Conventional Loans

Fixed Rate Mortgages: Your rate and payment never change.

  • 30 Year Fixed Loan
    Benefits: Lowest fixed monthly payments

  • 20 Year Fixed Loan
    Benefits: Low fixed monthly payments

  • 15 Year Fixed Loan
    Benefits: Lower rate than the 30 or 20 Year Fixed Loans; Pay less interest and pay your home off more quickly.

  • 10 Year Fixed Loan
    Benefits: Lower rate; Pay off your loan and build equity faster.

  • 5 Year Fixed Loan
    Benefits: Lowest rate; Pay off your loan and build equity the fastest

Adjustable Rate Mortgages: After the initial period your interest rate can change once a year.

  • 3/1 ARM
    Fixed Rate for 3 Years, Adjustable Rate for the remaining 27 years

  • 5/1 ARM
    Fixed Rate for 5 Years, Adjustable Rate for the remaining 25 years

  • 7/1 ARM
    Fixed Rate for 7 Years, Adjustable Rate for the remaining 23 years

What are the Conventional Down Payment Requirements?

For Purchase transactions Conventional Loans require the home-buyer to put down at least 5% - 20% of the purchase price of the home. For a Refinance transaction, most lenders require at least 10% equity in the property.

What types of property are eligible?

Most conventional loan programs allow you to purchase single-family homes, warrantable condos, planned unit developments, and 1-4 family residences. A conventional loan can also be used to finance a primary residence, second home and investment property.