Conventional Loans with Ed Huber

Conventional Loans

Unlike FHA loans, conventional loans are popular mortgages that are not insured by the federal government. They are typically offered through private lenders, such as banks, credit unions, and mortgage companies. Here's a basic summary of conventional loans:

  1. Down Payment: Conventional loans often require higher down payments than FHA loans, typically around 5% to 20% of the purchase price. However, some programs allow for lower down payments.
  2. Credit Score Requirements: Borrowers generally need a higher credit score for a conventional loan than FHA loans. Most lenders prefer a credit score of 620 or higher.
  3. Mortgage Insurance: Private mortgage insurance (PMI) is required for conventional loans if the down payment is less than 20% of the home's purchase price. PMI can be removed once the loan-to-value ratio (LTV) reaches 78% through principal payments, unlike FHA loans, where mortgage insurance may continue for the life of the loan.
  4. Loan Limits: Conventional loans also have loan limits, typically higher than FHA loan limits. These limits can vary depending on the area and the housing market.
  5. Property Standards: Conventional loans may have less stringent property standards than FHA loans. However, the property's condition can still affect the loan approval, as lenders need to ensure the property is a good investment.
  6. Flexibility: Conventional loans offer more flexibility regarding loan types and terms, including fixed-rate and adjustable-rate mortgages (ARMs) with various term lengths.
  7. Loan Purpose: These loans can be used for a primary residence, second home, or investment property, providing more options than FHA loans, which are strictly for primary residences.
  8. No Government Insurance: Since the government does not back conventional loans, they pose a higher risk to lenders. As a result, the qualification criteria can be stricter, including credit score, debt-to-income ratio (DTI), and financial history.


Conventional loans are a good fit for borrowers with solid credit, a stable income, and the ability to make a higher down payment. They offer many options and flexibility, making them a preferred choice for many homebuyers and investors.