What is a conventional loan?

A conventional loan is a mortgage that is not backed by a government agency. Conventional loans are often also called “conforming” loans because they follow lending rules set by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). The right loan depends on your financial situation.

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Is a 20% down payment required for a conventional loan?

A 20% down payment is not a requirement for a conventional loan; in fact, many conventional loans are made with as little as 3 percent down. Private mortgage insurance, or PMI, is required for any conventional loan with less than a 20% down payment.

What is a 30-year fixed-rate conventional loan?

Conventional loans come in 15, 20, 25, and 30-year terms. Some lenders even offer 10-year conventional loans. The shorter your loan term, the higher your monthly payment. Fortunately, a 30-year fixed-rate conventional loan still comes with low fixed-interest payments that are accessible to the majority of home buyers and refinancers.

What are the pros and cons of a conventional loan?

Conventional loans only require a monthly mortgage insurance fee, and only when the homeowner puts down less than 20 percent. Plus, that mortgage insurance cost is often lower than that of government-backed loans. Conventional loans are actually the least restrictive of all loan types, in some respects.

When buying a home, many people opt for a conventional loan, a type of mortgage that’s readily available from most lenders. Conventional loans aren’t backed by a government agency, but they usually follow some government guidelines.

What are the differences between conventional and government-backed loans?

What are the loan limits for a conforming conventional loan?

Conforming conventional loan: Loan limits for conforming conventional loans are set by the FHFA. The current maximum is $548,250 in most U.S. counties, $822,375 in high-cost areas and even more in…