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What Is a Conventional Loan?

A Conventional Loan is a type of mortgage not backed by the federal government, unlike FHA, VA, or USDA loans. These loans are offered by private lenders—such as banks, credit unions, or mortgage companies—and follow guidelines set by Fannie Mae and Freddie Mac.

Conventional loans can be used to buy or refinance a primary residence, second home, or investment property, and they typically offer competitive interest rates and flexible terms for qualified borrowers.

Who Qualifies for a Conventional Loan?

To be eligible for a conventional mortgage, borrowers typically need:

  • A credit score of 620 or higher (better terms with 700+)

  • Stable income and employment history

  • A manageable debt-to-income (DTI) ratio

  • Documentation like W-2s, tax returns, and pay stubs

If you’re financially stable and have good credit, a conventional loan could be a great fit.

Benefits of a Conventional Loan

Conventional loans offer a number of advantages:

  • 💰 Higher loan limits than most government-backed loans

  • 🔒 Lower interest rates (for well-qualified borrowers)

  • 🏠 No mortgage insurance required with a 20% down payment

  • 🔄 More flexibility in loan terms, down payments, and property types

These loans are especially attractive for buyers who want to avoid the extra costs of mortgage insurance or who are purchasing a more expensive home.

Types of Conventional Loans

There are several options within conventional financing, including:

✅ Fixed-Rate Conventional Loan

  • Interest rate stays the same for the life of the loan

  • Predictable monthly payments

  • Common terms: 15, 20, or 30 years

🔄 Adjustable-Rate Mortgage (ARM)

  • Lower initial interest rate

  • Rate adjusts after an initial fixed period (e.g., 5, 7, or 10 years)

  • Good for short-term ownership plans

💼 Jumbo Loan

  • For homes that exceed conforming loan limits (varies by area)

  • Great for high-priced or luxury properties

  • Requires strong credit and larger down payments

Is a Conventional Loan Right for You?

If you’re a financially qualified homebuyer looking for lower interest rates, flexible loan options, and no government restrictions, a conventional loan could be your best choice.

👉 Contact MortgageSimplified.Net today to see if you qualify and explore your options with one of our friendly, experienced loan specialists.

If you have any additional questions, be sure to contact Mortgage Simplified to see if a conventional loan is the right choice for you.