A conventional loan is a mortgage loan that's not backed by a government agency. Conventional loans are originated, backed and serviced by private mortgage lenders like banks, credit unions, IMBs like Fidelity Direct Mortgage, LLC (FDM) and other financial institutions.
Conventional loans are broken down into conforming and nonconforming loans, depending on whether or not they conform to guidelines set by the Fannie Mae and Freddie Mac, the two government-backed mortgage companies that own many mortgages in the U.S.
Here are some general characteristics to know:
Credit score requirement: It's possible to get approved for a conforming conventional loan with a credit score as low as 620. Once again, Lenders may place their own requirements of higher credit score but FDM follows guidelines set by the agencies.
Down payment requirement: You can find conventional mortgage loans with a down payment requirement as low as 3%. There may be Down Payment assistance available based on Income/Credit/County/State etc. However, if you do not put down 20% or more, the lender typically requires you to pay Private Mortgage Insurance (PMI).
You can find conventional mortgage loans with a down payment requirement as low as 3%. There may be Down Payment assistance available based on Income/Credit/County/State.