Overview
Conventional loans are mortgages that conform to Fannie Mae or Freddie Mac guidelines. They offer flexible down payments, removable mortgage insurance, and competitive rates for borrowers with established credit.
Benefits
- Down payments from 3% to 20%+
- Mortgage insurance drops once you reach 20% equity
- Available for primary, second, and investment properties
- Flexible terms (10, 15, 20, 25, 30 years; ARM options)
Eligibility
- Typically 620+ FICO
- Two-year work history
- Debt-to-income generally below 45-50%
- Documentation of income and assets
Cincinnati scenario
A West Chester couple putting 10% down on a $400,000 home. We compare 30-year fixed, 7/6 ARM, and a strategy to drop PMI early to choose the lowest 5-year cost.
Frequently Asked Questions
Conventional loans typically require higher credit and may offer better long-term costs once you reach 20% equity. FHA is often more accessible for borrowers with lower credit or higher debt-to-income.