Blog Layout

Conventional Mortgage Loans FAQs

Ken Venick • Feb 21, 2020

When shopping for a mortgage, you’re bound to encounter the term “conventional mortgage” or “conventional loan.” Here are some answers to the most frequently asked questions about conventional mortgage loans.

What is a Conventional Loan?

One of the most common types of loans that home buyers come across is the conventional loan. A conventional loan is a traditional loan that is used to purchase a property but is not backed or guaranteed by any government agency.

Conventional loans follow the guidelines that Fannie Mae and Freddie Mac – two agencies responsible for standardizing mortgage lending – have set. But it’s lenders that are responsible for approving your conventional loan.

What Are The Benefits of a Conventional Loan?

Conventional loans may offer some advantages that other loan types do not have. Down payments can be as low as 3%, there may be less paperwork, and you will not have monthly primary mortgage insurance (‘PMI’) with a down payment of at least 20%.

How Much is a Conventional Loan Down Payment?

A typical conventional loan down payment is 20%, but it is possible to get a conventional loan with less than 20% down, depending on borrowers who meet the specific requirements.

What Type of Documentation Do I Need?

Among the documentation you may need for a conventional loan are:

  • Copy of driver’s license
  • Two years full tax returns if self-employed – all pages and all schedules
  • Two years W2’s
  • Two most recent pay stubs with year-to-date pay
  • Two most recent asset statements – all pages with full transaction history
  • Copy of your mortgage statement if you currently own

What Types of Properties Can I Purchase?

You can purchase property types such as single-family homes, condos, and townhomes.  These homes can be purchased as primary residences, second homes or investment properties.

What Credit Score Do I Need to Qualify?

To qualify for a conventional loan, you’ll typically need a credit score of at least 620-640. Having a high credit score is a huge advantage as borrowers can make lower down payments and tend to get the most attractive conventional mortgage rates.

How Long is the Loan Term?

The most popular term for conventional mortgage loans is 30 years, which typically offers a lower monthly payment as a result of spanning payments over a longer duration but often has a higher interest rate compared to adjustable-rate mortgages (ARMs).

In addition to the 30-year term, 15-year mortgages are also available. A 15-year mortgage is paid off in half the amount of time as a 30-year mortgage, but the monthly payment is often higher. For home buyers looking to eliminate mortgage debt more quickly, a 15-year fixed-rate loan could help them achieve those financial goals. 

How Long Does It Take to Purchase a Home?

It takes about 30 days (give or take). This 30-day window assumes you have all your documentation present, provide accurate and verifiable information on your mortgage application and honoring any additional documentation requests that come from underwriting.

How Is My Interest Rate Determined?

The interest rate you qualify for is based on the risk you present. Lenders look at the following factors to determine that risk: credit scores , down payment, type of loan, mortgage insurance or no mortgage insurance and the current market.

By Ken Venick 27 Sep, 2021
Buying a home can be very intimidating and the no strings attached feeling renting can give someone sometimes seems like the easier option. But that isn’t always the case. There are many situations where it makes more sense to purchase your home instead of continuing to rent it year after year. There are alot of […] The post The Benefits of Buying A Home Over Renting appeared first on Owings Mills & Lutherville Mortgage.
By Ken Venick 15 Sep, 2021
Due to the pandemic, there have been a lot of people purchasing homes or even refinancing. It is important to understand the different types of loans that are offered to make sure the buyer knows their options.      Ken Venick has been in the mortgage loan business for over 30 years and is your […] The post Learning and Understanding The Different Types of Loans appeared first on Owings Mills & Lutherville Mortgage.
By Ken Venick 03 Sep, 2021
Find yourself wondering what a mortgage broker is? A mortgage broker acts as an intermediary between the borrower and the lender and controls transactions between the two. They take care of finding the best mortgages and interest rates by using their personal network of financial institutions and lenders.    Working with a mortgage broker is […] The post Understanding What A Mortgage Broker Does appeared first on Owings Mills & Lutherville Mortgage.
By Ken Venick 27 Aug, 2021
Just bought a fixer upper that needs a lot of work? A home renovation loan gives the homeowner the funds needed to not only purchase the home, but fix it up as well. A home renovation loan should only be considered if the renovation of the home will increase the property value or reduce long-term […] The post What is a Renovation Loan? appeared first on Owings Mills & Lutherville Mortgage.
By Ken Venick 20 Aug, 2021
Congratulations, you are looking to buy a new home! This is such an exciting time in your life, but it can also be an expensive one. When it comes to buying a home there will be plenty of hidden expenses you may not have taken into account when you decided to become a homeowner. It […] The post Hidden Expenses When Buying A Home appeared first on Owings Mills & Lutherville Mortgage.
By Ken Venick 13 Aug, 2021
The home buying process starts with figuring out the location of where you want to live. This can be extremely overwhelming with a lot of different scenarios to think about and a lot of decisions to make. Here at Ken Venick, we want to make the home buying process as easy as possible and that […] The post 5 Important Tips A Homeowner Should Know When Narrowing Down An Area To Live In appeared first on Owings Mills & Lutherville Mortgage.
By Ken Venick 06 Aug, 2021
On the road to buying a new home? Is your lender requiring you to have a co-signer in order to get your loan? We break down the requirements of a co-signer to give you a better understanding as to why you may need one in the first place.     A co-signer is someone (like […] The post Why Is Your Lender Requiring You To Have A Co-Signer? appeared first on Owings Mills & Lutherville Mortgage.
By Ken Venick 26 Jul, 2021
The Federal Reserve has said it will keep it’s interest rates close to zero, but it wont stay this way for long. Homeowners have been quick to put their houses on the market since more and more buyers are on the prowl are on the hunt for a new place to call home.      […] The post Money Moves To Make When Your Interest Rates Are Low appeared first on Owings Mills & Lutherville Mortgage.
By Ken Venick 19 Jul, 2021
Home renovations are one of the hottest topics in 2021. It gives an owner the chance to turn their space into exactly what they need it to be, whether they have just moved in, making more room, or getting ready to put it on the market. Home renovations can increase the value of a home […] The post 5 Home Renovations With The Highest and Lowest Returns appeared first on Owings Mills & Lutherville Mortgage.
By Ken Venick 29 Jun, 2021
It may take weeks, months, or even years to find your dream home. And one you find it, you want to do everything you can to secure it. There’s always the fear that someone else can snatch it up — which means you need to seal the deal with a competitive offer!    In this […] The post Top Ways To Show A Seller Your Offer Is Legit appeared first on Owings Mills & Lutherville Mortgage.
More Posts
Share by: