You've probably heard the phrase "conventional financing", but unless you’re in the mortgage industry, you may have no idea what it means. Simply put, conventional mortgages are originated according to Fannie Mae and Freddie Mac guidelines. For 2020, the new conventional loan limit is $510,400.
In most cases, if you have strong credit, and the income and assets to qualify, a conventional loan is likely to suit your needs. Typical conventional loans offer:
- Low upfront fees
- Low interest rates
- A more streamlined paperwork/process than government loans
- Ideal option if you have 20% down payment, but still a great option at 3%, 5% and 10% down
- If you need mortgage insurance, it can be removed sooner than with an FHA loan
- If you need a mortgage above the $510,400 conventional limit, you'll need a high balance or jumbo loan
- If your credit isn't the strongest, you may find that an FHA loan, which tend to be more flexible on credit score, better suits your needs.
- If you're a veteran, you might want to take advantage of your VA eligibility with a VA loan