Benefits of a Conventional Mortgage Loan
2018 Conventional Loan Limits by State
FAQ About Using a Conventional Mortgage Loan
Conventional mortgages do not require a 20% down payment. This is a common myth that simply is not true.
Both Fannie Mae and Freddie Mac allow as low as 3% down payment if you're purchasing a single family home, using a fixed rate mortgage, at or under the conforming loan limit.
PMI, or Private Mortgage Insurance, is required with any Conventional mortgage above 80% of the value of the home.
One of the many advantages of Conventional PMI over FHA mortgage insurance is that PMI rates scale with the actual loan to value at the time you lock in the loan. If you have a 10% down payment, your PMI will be less than if you have a 3% down payment.
Another great advantage of Conventional is the ability to use LPMI, or Lender Paid Mortgage Insurance. This essentially means that the mortgage insurance premiums are rolled into a slightly higher interest rate.
Conventional PMI can be removed in the future without refinancing your existing mortgage.
Conventional mortgages are commonly used to buy investment property for rental income. The minimum down payment is determined by the number of legal units in the home.
Investment Property Down Payment Requirement Chart:
- 15% Down Payment - Single family residence (SFR)
- 25% Down Payment - 2 to 4 Units (Duplex, Triplex, Fourplex)
These Loan to Value (LTV) guidelines apply to both Fannie Mae and Freddie Mac mortgages.