Conventional Mortgage Loans

A conventional loan is a type of mortgage that a government agency like the FHA, VA, or USDA does not back. Offered by private lenders, these loans come with their own specific sets of guidelines and advantages.

There are several types of conventional loans to suit different borrower needs.  Some of the most common include conforming loans (which adhere to loan limits set by Fannie Mae and Freddie Mac), non-conforming loans (like jumbo loans, exceeding conforming limits), fixed-rate mortgages (offering predictable payments), adjustable-rate mortgages (ARMs, starting with lower rates that can change over time), and low down payment options (where certain conventional loans allow for down payments as low as 3%).

Lenders like DSLD Mortgage consider a few key factors when determining eligibility for a conventional mortgage loan. These include your credit score (a minimum score of 620 is typical, with better rates for higher scores), debt-to-income ratio (DTI, which measures your debt payments against income), down payment size (20% eliminates PMI but there are lower down payment options), and income and assets (which verify your financial stability).

For a conventional loan, lenders like DSLD Mortgage generally require a credit score of at least 620. But if you’re aiming for the best possible interest rates, a score of 740 or higher is ideal.

Remember, your credit score isn’t the only factor that matters. Conventional loan lenders will also look at your income, assets, and existing debts when considering your application.

If you’re unsure where you stand with your credit score, you can request a callback to start the process, and we’ll help guide you through your options.

In a conventional home loan, a 20% or more down payment typically allows you to avoid private mortgage insurance (PMI). However, if your down payment is lower, you can still qualify with as low as 3%, depending on your credit profile.

Once you reach 20% equity in your home, you can eliminate the PMI. To learn more about how down payments and PMI work with a DSLD Mortgage, talk to one of our Loan Officers for tailored advice.

Conventional home loans offer several advantages that set them apart from government loan programs like FHA, VA, or USDA loans. For starters, there are no maximum income limits, giving you more financial freedom.

You’ll also find a variety of rate options to fit your needs. For example, you could opt for a fixed rate for predictable payments or an adjustable rate that might offer initial savings.

If speed and efficiency are important to you, download our app to begin your application and make your homebuying journey smoother.

In a conventional home loan, fixed rates remain the same throughout the term, offering predictability. Adjustable rates, on the other hand, usually start lower but can fluctuate over time depending on market conditions.

Each option has benefits and drawbacks, depending on your financial situation and long-term plans. If you’re still uncertain about which rate type is best for you, explore our blog for more information to empower yourself with the knowledge you need to make the right choice. Or get in touch, and we’ll help you work things out in the best way for you.