Conventional Loans

A traditional fixed rate conventional mortgage is the most popular mortgage in America. 

Why Consider a Conventional Loan?

With our conventional loans we are able to offer some of the most competitive pricing for our clients with above-average credit scores,

larger down payments on their home purchases, or those with equity in their homes on refinances.

  • Low down payment options

    We offer mortgage solutions to help you purchase your next home with as little as a 3% to 5% down payment for primary homes.

  • Save money on interest or take cash out of your equity

    We offer cash-out conventional refinance solutions up to 80% loan-to-value, and up to 95% loan-to-value for your rate-and-term refinance.

  • Take advantage of favorable loan terms

    Conventional loans reward you for your good credit with lower interest rates, more affordable fees, and the ability to reduce or even remove private mortgage insurance premiums.

  • Let JFQ Lending show you how

    Our experienced mortgage professionals will review your complete financial profile, including your income, assets, and credit to make it simple & easy.

Conventional Loan FAQs

What is a conventional loan?

A conventional mortgage is simply a loan that is not being made or backed by a federal government program, like the FHA, VA, or USDA.

Conventional mortgages are considered “conforming” if they meet the specific guidelines set forth by Fannie Mae and Freddie Mac – the government-sponsored enterprises that purchase loans from lenders and sell them to investors. 

Jumbo loans can also be considered “non-conforming” conventional mortgages, because they exceed the conforming loan size limits for a particular area, but still adhere to income, asset, and credit guidelines. Learn more about jumbo loans here.

How is a conventional mortgage different from other types of loans?

Conventional vs. FHA

Conventional loans have more stringent qualifying criteria than FHA loans, especially when it comes to your credit. In addition to higher minimum credit score requirements, conventional loans typically require a longer look back into your credit history for derogatory events, like a bankruptcy, short sale, or foreclosure. 

With conventional loans there are options to reduce, avoid, and remove private mortgage insurance premiums that are unavailable on FHA loans.

Conventional purchase loans may require as little as a 3% to 5% down payment on certain programs.

FHA loans, which are backed by the Federal Housing Administration, feature a low minimum down payment of 3.5%, more flexible credit qualifying criteria, and may require two types of mortgage insurance premiums. Learn more about FHA Loans here. 

Conventional vs. VA

While conventional loans are available to anyone who meets the qualifying criteria, VA Loans are reserved for active duty military personnel, veterans, and their surviving spouses. 

Conventional loan programs can be used to purchase or refinance primary homes, second homes, and investment properties with as little as a 3% to 5% down payment on certain programs. VA loans can only be used to purchase a new primary home or refinance a current primary home and allow for 100% financing — meaning no down payment or existing home equity is required.

VA Loans, which are backed by the Department of Veterans Affairs, typically require a Funding Fee of between 1.4% and 3.6% with exceptions for those receiving VA disability benefits, surviving spouses, and active-duty Purple Heart recipients. Learn more about VA Loans here.

Conventional vs. USDA

Conventional loans are available in any location across the country, and generally the more income you have the better. USDA Rural Development loans are specifically for use in qualifying rural areas and have household income limits based on the area. 

USDA loans allow for up to 100% financing without requiring Private Mortgage Insurance (PMI) but do require a 1% guarantee fee which can be paid upfront or set up on a monthly basis.

What are the requirements for conventional loans?

Conventional loans have specific requirements for your income, assets, and credit. Ideally, your debt-to-income ratio (DTI) would be less than 43%, with some exceptions based on compensating factors up to 50%. 

In addition to your down payment funds and loan costs, certain conventional loan programs require you to have liquid assets available, called reserves. Typically, these are equal to a number of months of your housing expenses (including principal, interest, taxes and insurance). Loans for second homes and investment properties are more likely to have substantial reserve requirements of 6 to 24 months. 

Many conventional loan programs have minimum credit score requirements of 620 or better, while the best pricing is reserved for higher scores. Learn more about credit scores here.

What is Private Mortgage Insurance (PMI) and do I need it?

Private Mortgage Insurance (PMI) is a fee assessed on conventional mortgages with less than 20% equity in the property. This insurance premium protects the lender/investor in the event of a default such as a short sale or foreclosure. It does not protect the homeowner however, so talk with a mortgage expert today about avoiding, reducing, or removing PMI on your next loan. Learn more about PMI here.

Getting approved starts here.

Our mortgage professionals are ready to help.

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