- Conventional loans use Fannie Mae or Freddie Mac to establish guidelines for borrowers.
- A conventional loan can be conforming or nonconforming and have either a fixed or adjustable rate.
- No mortgage insurance required (with 20%+ down payment)
- No upfront mortgage insurance premium (UFMIP)
- Great for purchases and refinances
- Mortgage insurance is removed automatically as applicable
- Lower cost than other loan products
- Makes for a stronger purchase offer than FHA or VA
- Monthly Mortgage insurance (if required) is less than that of an FHA loan
- Restrictions on gift funds for down payment and closing costs
- Minimum credit score required
- Generally requires larger down payments than federally insured loans
- Requires private mortgage insurance (PMI) when the down payment falls below 20%.
- Interest rates are typically higher than that of FHA or VA loans