Conventional loans are some of the most common mortgage products out there. They can be used to finance several different property types with any occupancy. They come in fixed and adjustable rates and offer flexible payback periods ranging from 10 years to 30 years. The minimum credit score for a conventional home loan is 620.
The types of property you can purchase with a conventional loan are: single family homes, townhomes, condos, multi-unit properties (2-4 units), co-ops and even manufactured homes.
There are conventional loan programs that help first-time homebuyers with down payments as low as 3%. Some of these special products may have income limits and require homebuyer education, but can offer attractive interest rates and lower mortgage insurance premiums.
Conventional loans can be used to buy second homes, vacation homes, and investment properties. You’ll find that interest rates and down payment requirements are higher when not purchasing a primary residence.
For refinance loans, conventional loans are popular since you can use them to cash-out on your home’s equity. If you’re not looking to cash-out, consider a conventional loan to improve your rate, reduce your payback term, or remove mortgage insurance if you used a low down payment product to purchase your home.