Conventional

A conventional mortgage loan is one that is not guaranteed or insured by the federal government.

Conventional mortgages can also be non-conforming, which means that they do not meet Fannie Mae’s or Freddie Mac’s guidelines. One type of non-conforming conventional mortgage is a jumbo loan, which is a mortgage that exceeds conforming loan limits.

In most cases, you will need a credit score of at least 620 and a debt-to-income ratio of 50% or less.

It is possible for first-time home buyers to get a conventional mortgage with a down payment as low as 3%; however, the down payment requirement can vary based on your personal situation and the type of loan or property you are getting:

• If you are not a first-time home buyer or making not more than 80% of the median income in your area, the down payment requirement is 5%.
• If the home you are buying is not a single-family home (i.e., it has more than one unit), you may need to put down 15%.
• If you are buying a second home, you will need to put at least 10% down.
• If you are getting an adjustable-rate mortgage, the down payment requirement is 5%.
• If you are getting a jumbo loan, the down payment requirement ranges from 20% – 40%.
• If you are refinancing, you will need more than 3% equity. In all cases, you will need at least 5% equity. If you are doing a cash-out refinance, you will need to leave at least 20% equity in the home. When refinancing a jumbo loan, you will need 10.01 – 25% equity, depending on the loan amount.