You've decided to buy a home. One of the first steps is figuring out what type of mortgage fits your situation. Conventional loans are a popular choice for many buyers, but they come with their own set of rules and requirements. Here are answers to the questions we hear most.
What Is a Conventional Loan?
A conventional loan is a mortgage that isn't backed by the government, unlike FHA loans (Federal Housing Administration) or VA loans (Department of Veterans Affairs). Conventional loans are offered by private lenders and follow guidelines set by Fannie Mae and Freddie Mac. Because they're not government-insured, lenders set slightly stricter standards around credit score and down payment compared to FHA.
How Do I Qualify for a Conventional Loan?
You'll typically need a credit score of at least 620 and a down payment of at least 3%. A higher credit score and a larger down payment can result in better loan terms and lower interest rates. You'll also need to provide proof of income and employment. The credit score that actually gets you a better rate is usually 740 or above, which is where you'll see the most favorable pricing.
What Are the Benefits of a Conventional Loan?
Conventional loans often have lower interest rates and fewer fees than government-backed loans. They offer more flexibility in terms of loan amounts and property types. If you have a strong credit score and put down 20% or more, you can avoid private mortgage insurance (PMI) entirely. They're also the go-to option for investment properties and second homes.
Ready to see if you qualify for a conventional loan?
We'll walk you through your credit, income, and down payment options in one quick conversation. No pressure.
How Much Can I Borrow?
The amount you can borrow depends on your income, credit score, and other factors. Conventional loan limits are updated annually. For 2024, the conforming loan limit was $766,550 for most single-family homes in Florida. Higher-cost areas may have elevated limits. Amounts above the conforming limit require a jumbo loan, which carries its own qualification standards.
Can I Use a Conventional Loan to Buy a Fixer-Upper?
Yes, you can use a conventional loan to buy a fixer-upper, but the property needs to meet minimum condition standards at the time of closing. If the home needs significant repairs, you may need a renovation loan or a home equity line of credit (HELOC) to fund the work after purchase.
How Long Does It Take to Get a Conventional Loan?
The industry average runs 30 to 45 days from application to closing. At 14 Days To Close, our process is built around a 14-day closing timeline. When the file is clean and the buyer is prepared, we get there. Jordan has closed loans in as few as 5 days.
What Mistakes Should I Avoid?
Common mistakes include ignoring your credit score before applying, not saving enough for a down payment plus closing costs, and making large purchases during the loan process. For a full breakdown, see our guide to the top mistakes when applying for a conventional loan.
If you have more questions or you're ready to apply for a conventional loan, schedule a call with Jordan or start your pre-approval below. We're available nights and weekends.
