What is a Conventional Mortgage Loan? 

A conventional mortgage conforms to:

• Current loan limits
• Down payment requirements
• Borrower income requirements
• Debt-to-income ratios
• Other underwriting guidelines established by Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mae purchase mortgages that meet these limits, thereby creating additional funding lenders can use to make a new mortgage.
• You have 2 types of Conventional Loans called conforming and non-conforming loans, also know as a Jumbo loan. (Conforming Limit 2020: $510,400)

The Federal Housing Finance Agency now sets the loan limits and created higher loan limits for areas of the country designated as “high-cost areas.” You have high-cost areas in all regions of the country except the Midwest.

What are the requirements for a Conventional Loan?

Income Qualifications: Conforming loan programs require comprehensive income qualifications.

• Your income must meet standards and guidelines relevant to the loan program.
• Your monthly housing costs (mortgage principal and interest, property taxes and insurance) must meet a specified percentage of your gross monthly income.
• You must have enough income to pay your housing costs plus all additional monthly debt.

Conventional Loans Facts

A conventional loan option is a home purchase option that is not insured by a government entity and is referred to as a non-GSE loan. A non-government sponsored entity.

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