The Conventional Loan program is generally for borrowers with greater than 700 credit scores. It requires
at least a 5% down payment and, in some cases, it cannot be obtained without a 10% down
payment. It carries a monthly mortgage insurance premium (PMI) if there is not 20% down, but
it has no funding fee in the closing costs to insure the loan. Although mostly borrowers with high
credit scores use this program, in some cases lenders will consider scores as low as 640.
Conventional Loan mortgages are “plain vanilla” home loans. They follow fairly conservative guidelines for:
- Borrower credit scores.
- Minimum down payments.
- Debt-to-income ratios. Closing costs, down payments, mortgage insurance and points can mean the borrower has to show up at closing with a sizable sum of money out of pocket. Typically, Conventional Loan mortgages pose fewer obstacles than Federal Housing Administration or Veterans Affairs mortgages, which may take longer to process.