Conventional Home Loans
A conventional loan is the most common type of mortgage in the U.S. It isn’t insured by the government, and it follows the guidelines set by Fannie Mae and Freddie Mac.
Conventional loans work well for buyers and homeowners with solid credit and steady income. They can be used for a primary home, a second home or an investment property, and mortgage insurance can be removed once you build enough equity.
Who it’s for
How it works
You choose a fixed rate, where the payment stays the same for the life of the loan, or an adjustable rate (ARM), where the rate is fixed for a set period and then adjusts. Your rate depends on your credit, your loan-to-value and the property type.
If you have less equity, private mortgage insurance (PMI) is usually required. Unlike FHA mortgage insurance, PMI on a conventional loan can be removed once you reach enough equity, either by paying down the loan or as your home’s value rises.
What you need to qualify
- Credit score: generally 620 or higher. Higher scores get better pricing.
- Debt-to-income ratio: typically up to about 45%, sometimes higher with strong compensating factors.
- Steady, documented income, usually two years of history.
- Funds for your down payment and closing costs, plus reserves in some cases.
- A property that meets appraisal and condition standards.
Documents to have ready
- Last 30 days of pay stubs
- W-2s for the last two years (and tax returns if self-employed or commission-based)
- Two months of bank and asset statements
- Photo ID
- Purchase contract, or your current mortgage statement if refinancing
How it works with Amerifi Lending
Frequently asked questions
What’s the difference between conventional and FHA?
FHA loans are insured by the government and are more flexible on credit, but FHA mortgage insurance usually lasts longer. Conventional loans reward stronger credit, and PMI can be removed. We can price both side by side for you.
Can I use a conventional loan for a rental property?
Yes. Conventional loans can finance investment properties, though requirements are stricter. If you’d rather qualify on the property’s rent instead of your income, see our DSCR loans.
How do I get rid of PMI?
PMI can usually be removed once your loan balance drops far enough relative to your home’s value, either automatically or by request. A new appraisal is sometimes used to show increased value.
Is a fixed rate or an ARM better?
A fixed rate gives you a payment that never changes. An ARM can start lower, which may make sense if you plan to sell or refinance within a few years. We’ll walk you through both.
Helpful guides
Related loan options
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Have questions? Call or text us, or start your application online. There is no cost to find out what you qualify for.
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