A conventional home loan is not formally backed by any government entity such as FHA or VA. A conventional home loan is a loan that follows guidelines established by Fannie Mac and Freddie Mae, the two government agencies that help standardize mortgage lending in the United States. Conventional home loans are also known as conforming loans or conforming mortgage because they “conform” to Fannie Mae and Freddie Mac loan underwriting standards.
It’s not true that you need a 20% down payment for a conventional home loan. You can put down as little as 3% to 5%.
Conventional Loan Criteria Highlights
- Requires only 640 credit score,
- Flex Loan Terms Available from 8 to 30 Years,
- Down Payment can be a gift from family or employer,
- Competitive rates and low closing costs,
- No up-front mortgage insurance like FHA and VA requires,
- Does not require taxes and/or insurance to be escrowed, and
- No Closing Costs Option Available.