Conventional loans are simply mortgages that aren't backed by government entities likes the Federal Housing Administration (FHA) or US Department of Veteran Affairs (VA). Conventional loans are the most common loan with a variety of programs offered to meet your personal situation. The healthier your credit profile and the larger your down payment, the more favorable terms you may qualify for.
- Typical fixed interest rate loans have a terms available from 10 to 30 years. A shorter-term loan usually results in a lower interest rate.
- Adjustable-rate mortgages, or ARMs, fluctuate in relation to the rate of a standard financial index, such as the SOFR. Monthly payments can go up or down accordingly.
Conventional loans require as little as 3% down.
- If the borrower provides a down payment of less than 20% of the sales price, private mortgage insurance (PMI) will be required. PMI is typically either a monthly or one-time premium that is paid to protect the lender in instances where the borrower defaults. With a down payment of 20% or more, no PMI is required.
Learn more about other loan programs