Known as the “plain vanilla” home loans, conventional mortgages are one of the three major mortgage loans for borrowers. There is no minimum loan amount for a conventional mortgage loan, which makes a conventional mortgage loan an effective vehicle for all your borrowing needs. Being able to purchase your dream home becomes a reality with the conventional mortgage loan, which offers great rates, low costs and homebuying flexibility. The maximum loan amount is $424,100 and you can use conventional mortgage loans for many types of properties. This includes condos, where financing a condo with 5% down calls for a full review. Borrowers who want a limited condo review can choose to give over 25% down. Investment properties also call for a minimum of 15% down.
Conventional mortgage loans also allow for gifts as long as the buyer provides 5% of his/her own funds. The guidelines for a conventional mortgage loan are less relaxed. The minimum credit score needed is 620 while the standard Debt to Income (DBI) ratio is 43%. Conventional loans adhere to strict institutional guidelines and Fannie Mae or Freddie Mac guidelines. The security and the stability of the conventional mortgage loan makes it a popular option for homebuyers. Because conventional mortgages offer lower interest rates and a quicker payout, they provide great value for buyers who have the ability to put at least 5% down.