Conventional Mortgage

1 ConventionalConventional is defined as “used and accepted by most people: usual or traditional; of a kind that has been around for a long time and is considered to be usual or representative.”

30 years ago, 80% of all mortgages were conventional: 20% down, and a 700-credit score.

Today, conventional loans are @45% of all mortgages. A better term would be Fannie Mortgage because banks “sell” the expected payments on the mortgage to the semi-government agency Fannie Mae.

Key Facts – Hard to Qualify – 620 FICO – As Low as 3% Down

This is still the traditional mortgage for borrowers with the best credit scores and credit history.

A 20% down payment is not required. Qualified first-time homebuyers can place 3% down. Others 5%.

The minimum credit score to qualify is 620. And more important, a near perfect, long credit history.

You need 3+ separate credit lines, for 2 years, and perfect credit for 2-3-4 years. Credit lines are credit cards, auto loans, education loans. Adding your utility payments or cell phone doesn’t count here as it would for an FHA mortgage.

A 620 score or even a 720 score by itself does not qualify one for a conventional loan.

Any competent loan officer will try to place you in a conventional mortgage. This is the toughest loan to get approval.

Sellers can contribute 3% toward closing costs.

Mortgage insurance required if you place less than 20% down. Typically the mortgage insurance falls off after 6-7 years.

The higher your credit score, the lower your rate. Slightly higher rates than FHA.

Most borrowers want to be here.

Don’t worry about the details. Get a good loan officer.