Conventional Loans

A conventional loan is a loan insured by private investors, that can be done with a middle credit score as low as 600. If your credit score is over 720, a conventional loan can be more advantageous than an FHA loan. There are two types of conventional loans: a conforming loan and a jumbo loan. A conforming mortgage loan is a loan with a loan amount up to $453,100 that also fits guidelines set forth by Fannie Mae and Freddie Mac. A jumbo mortgage loan is a loan over the conforming loan cap that often times has a lower interest rate than a conforming loan. With recent guideline changes, the new minimum down payment for a conventional loan is 3%. You can either get a 10,15, 20, 25, or 30 year fixed rate, or choose to go with an adjusted rate mortgage that fluctuates with the market. The debt-to-income ratio for conventional loans can go up to 50%. For those that qualify, you can also use the MCC tax credit with a conventional loan, which allows the homebuyer to claim up to $2,000 annually as a tax credit toward their federal income tax liability.