What Is A Conventional Loan & The Requirements?

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What is a Conventional Loan?

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A conventional loan is a mortgage not insured or guaranteed by a government agency such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). As compared to FHA loans, a conventional mortgage typically requires a higher credit score. These loans will also require Private Mortgage Insurance (PMI) for loans with less than a 20% down payment. These loans are subject to maximum loan limits. Loans that exceed the maximum limit are known as Jumbo loans.

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Conventional Loan Benefits

Here are some of the benefits of a conventional loan, refinance or cash out refinance:

Conventional loans may be used to purchase investment properties or a second home
No private mortgage insurance required if you put 20% down
A variety of flexible loan term options to fit your needs whether it’s a 15-year or a 30-year
No upfront mortgage insurance premium
The ability to refinance into a conventional loan from any other loan type that may allow you to take advantage of lower interest rates

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Conventional Loan Eligibility

To be eligible for a conventional purchase, refinance or cash out loan you should have:

Good credit, typically 620 or greater FICO.
Provide a down payment, ideally 20% to avoid Private Mortgage Insurance (PMI).
Show proof of income and two years of tax returns.
Cash reserves on hand to cover closing and additional costs.
Ensure total debt does not exceed 43% of your income, in most cases.

Freedom Mortgage also offers alternatives to conventional mortgage loans such as FHA, USDA and VA which have different benefits and eligibility requirements than conventional loans.

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What Our Customers Say

Check out the reviews from some of our customers.

Very helpful and thorough

- Gerald K., Seguin, TX
Rated by 3 Star out of 5

Zach spent quite a long time with me on the phone very late on a Friday afternoon. He was very helpful and thorough throughout the process, including follow-ups. We closed yesterday and are looking forward to our two months off from a mortgage payment and continuing to work with Freedom Mortgage. Also, hats off to Bristine Kenyon
All went as planned

- Jeremy F., Medford, NJ
Rated by 3 Star out of 5

I knew what to expect, which makes it easier. Mike Reese worked quickly to get the loan setup and into process and Andre Mammino informed me at the right moment, as to what was going on and what was needed. All went as planned.
Excellent experience

- Luljeta P., Cherry Hill, NJ
Rated by 3 Star out of 5

I had an excellent experience with Freedom Mortgage. I worked with Michael Reese and Doug Frimmet. I'm happy I chose this company. I'm going to refer to my family and friends.

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Reviews and comments (i) have been submitted by customers voluntarily, (ii) are solely the views of such customers, and (iii) have been screened by Freedom Mortgage Corporation prior to publication in accordance with our guidelines. Customers were not compensated for their reviews/comments but were informed that the submittals may be used in Freedom Mortgage Corporation advertising. Customer experiences are not meant to suggest future performance and may not be representative of your experience.