What's The Difference Between Conventional Loans and Conforming Loans?
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Are all Conventional loans Conforming? A Conventional loan is a non-government loan, loan programs such as FHA, VA, and USDA are not considered conventional because they are government backed loans. Conventional Loan Programs include Conforming Loans, Non-Conforming Loans, and Jumbo Loans. A Conforming loan is a loan that meets Freddie Mac and Fannie Mae loan guidelines. In short, all Conforming loans are Conventional, but not all Conventional loans are Conforming.
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Should You Choose Conforming?
Conventional Conforming loan programs are the most popular choice for consumers because they offer a wide variety of benefits over government lending. However, you will have to meet certain standards in order to obtain Conventional Loan Programs. These standards include a credit score over 620, a healthy savings account, well established employment history, and a Debt-To-Income Ratio lower than 50%. While this sounds like a program for experienced home buyers, Conventional Loans are widely available to anyone who can meet the qualifying criteria, even First Time Home Buyers!
What Makes Conforming Attractive to Buyers?
- As little as 3% down*
- More Affordable PMI
- Fewer Steps to Closing
- More Flexible Qualifications
- Less expensive over time
* 3% Down programs are reserved for First Time Home Buyers and borrowers who meet certain income requirements
Go Conventional With 3% Down!
While most buyers will have to put the minimum 5% down for their loan, you may qualify for a 3% Down Conventional program. First Time Home Buyers and buyers with income less than 80% AMI now have the ability to get into a conventional loan program to obtain their mortgage.
Do You Qualify?If you meet one or more of these standards, you may qualify!
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What is AMI?The Area Median Income (AMI) is the household income for the median household in a region. Each year, the Department of House and Urban Development (HUD) calculates the median income for every metropolitan region in the country. HUD goes by region, rather than city, because families looking for housing are likely to look beyond the city itself to find a place to live. Ask your mortgage professional about your county's AMI limit or look for yourself by clicking the link to Fannie Mae's website.
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3% Down Conventional Programs
Freddie Mac HomePossible and Fannie Mae HomeReady
- Purchases up to 97% LTV, include FTHB
- Reduced Mortgage Insurance
- Income up to 80% AMI
- Gift Funds available for entire Down Payment
- Refinances up to 97% LTV
Conforming Loan Guidelines
