Conventional Loans

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

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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.

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Conventional Loan FAQs

A conventional mortgage is a loan that is not made or backed by a federal government program, like the FHA, VA, or USDA.
 
Conventional mortgages are “conforming” if they meet the specific guidelines from Fannie Mae and Freddie Mac. These government-sponsored enterprises buy loans from lenders and sell them to investors. 
 
Jumbo loans can also be considered “non-conforming” conventional mortgages. This is 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.

Conventional vs. FHA

 
Conventional loans have more stringent qualifying criteria than FHA loans. Especially when it comes to your credit. Besides higher credit score requirements, conventional loans can take a longer look back into your credit history as well. The focus is on derogatory events, like bankruptcy, short sale, or foreclosure. 
 
With conventional loans, there are options to reduce, avoid, and remove mortgage insurance premiums (MIP). These options are unavailable on FHA loans.
 
Conventional purchase loans may require as little as a 3% to 5% down payment on certain programs.
 
FHA loans, backed by the Federal Housing Administration, feature a lower down payment of as little as 3.5%. They also have more flexible credit qualifying criteria. FHA loans do have two types of mortgage insurance premiums though. Learn more about FHA Loans here. 
 

Conventional vs. VA

 
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. 
 
You can 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. They allow for 100% financing — meaning no down payment or existing home equity is required.
 
VA Loans, secured by the Department of Veterans Affairs, collect a Funding Fee of between 1.4% and 3.6% of the loan amount. There are 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. USDA Rural Development loans are only available in qualifying rural areas. They also have household income limits based on the area. 
 
USDA loans allow for up to 100% financing without requiring Private Mortgage Insurance (PMI). Instead, they collect a 1% guarantee fee which can be paid upfront or set up on a monthly basis.

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.

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.

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