Conventional loans are mortgage loans that are not part of a government program. There are two types of conventional loans. The first type are conforming loans. They have maximum loan amounts set by the federal government and abide by guidelines set by Fannie Mae and Freddie Mac. Guidelines for Non-conforming loans can vary by the lender.
The second type is non-conforming loans. Non-Conforming loans are loans that do not meet Fannie Mae and Freddie Mac’s standards for purchase. There are a few different types of non-conforming loans. Government backed loans are non-conforming loans that are insured by the federal government. If a borrower defaults on payments the government will pay the bill and because of this, lenders can offer loans to the borrower with lower down payments and credit scores. The most frequently originated government loans include VA Loans, USDA Loans and FHA loans. Jumbo loans are also considered non-conforming loans because they exceed the conforming loan limit set by US regulation. (These rates vary by county, check your county’s limits here).
Private mortgage lenders such as Mortgage Equity Partners of Fort Myers originate conventional loans. Conventional loan rates are dependent on a combination of your credit score and overall credit history. Down payment requirements on conventional loans are minimum 3% of the sales price of a home. Credit scores and debt to income ratios will dictate whether a larger down payment amounts may be required.