Conventional mortgages are not insured or guaranteed by the government, making them a great option for borrowers with solid credit and stable income.  Conventional mortgages are widely used in home financing and while they can offer the best terms in some cases, they also can be considered a more prudent loan option than others when it comes to documenting income and proving ability to repay.  Mortgage insurance applies with less than 20% down, however, conventional financing allows for some creative options to potentially avoid monthly mortgage insurance altogether.. even with less than 20% down through single premium buyouts.

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Who Is a Conventional Loan Best For?

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A conventional loan may be a great fit for a borrower with good credit, stable income, manageable monthly debt, and funds available for a down payment and closing costs. It is especially attractive for buyers who want competitive financing, flexible property options, and the opportunity to reduce or avoid mortgage insurance with a larger down payment.

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Examples:

• A salaried homebuyer with strong credit, two years in the same line of work, consistent employment history, moderate monthly debt, and 3%–20% available for a down payment.

• A self-employed borrower with strong credit, sufficient documented qualifying income, manageable monthly debt, and funds available for the down payment, closing costs, and any required reserves.

• A qualified first-time homebuyer may be eligible for as little as 3% down, making conventional financing a strong option when credit and income requirements are met. Discounted interest rates and mortgage insurance may also be available when certain income or program requirements are met.

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*Borrowers do not have to meet every example above, and qualification requirements vary by lender and individual financial profile*