Conventional loans often provide lower interest rates, flexible loan terms, and higher borrowing limits compared to many government-backed loans, making them a strong option for financing higher-priced homes.
A conventional loan may require as little as 3% to 5% down for qualified borrowers. However, making a smaller down payment can increase costs, including the requirement to pay private mortgage insurance (PMI).
To qualify for a conventional loan, borrowers typically need a credit score of at least 620, stable employment, a manageable debt-to-income ratio, and sufficient income and assets. The property's appraised value when determining eligibility.
A conventional loan can be a great option for homebuyers, offering competitive interest rates, flexible terms, and financing for various property types. The best loan choice depends on your financial situation, credit profile, and homeownership goals, so it's important to compare options and consult a mortgage professional.
Refinance an FHA loan into a conventional loan once you have at least 20% equity in your home, which equals an 80% loan-to-value (LTV) ratio. Eligibility requirements vary, so it's best to consult a mortgage professional to determine when refinancing makes sense for your situation.
There are several ways to help cover closing costs on a conventional loan, including negotiating seller concessions, accepting a slightly higher interest rate in exchange for lender credits, using gift funds from eligible sources, or taking advantage of down payment assistance programs that offer grants or forgivable loans. A mortgage professional can help determine which options you may qualify for.