First Time Home Buyer's Down Payment

Conventional Loan

Unlike a VA loan or an FHA loan, a conventional loan is not backed by any branch of the federal government. It is simply a traditional loan used to purchase a home. There are many different types of conventional loans, and each one comes with its own set of requirements and rules, though each one does require at least a twenty percent down payment or the borrower must pay for private mortgage insurance. Conforming loans follow the guidelines in place by Freddie Mac and Fannie Mae. Sup-prime loans are geared toward buyers who cannot afford a traditional mortgage because their credit score is too low. Jumbo loans are simply those that exceed a typical loan amount. Conventional mortgages are excellent for individuals who have excellent credit and a down payment, but the buyer must also have a low debt to income ratio. The guidelines for a traditional loan are conservative, but buyers can rest assured they are getting a good value and they can walk away with a good loan and equity in their new home.