Ready to Start Your Homeownership Adventure?

Conventional loans can be an excellent choice for many aspiring homeowners. As one of the most popular and straightforward mortgage options out there, they cater to borrowers with good credit, steady income, and funds for a down payment. These loans offer flexibility and simplicity, making them a go-to choice for those seeking an approachable path to homeownership.

Here at Diamond Residential Mortgage Corporation, we're committed to helping you find the perfect mortgage solution for your unique needs. As your partner through this process, we'll be by your side throughout this exciting journey, offering personalized support and guidance every step of the way.

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Conventional Loans

What is a Conventional Mortgage loan?

A conventional mortgage loan is a type of home loan that's provided by a lender rather than being backed by the government, like VA and FHA loans. These loans are popular among a wide range of borrowers due to their flexibility and variety of options. Conventional loans can be used to purchase a primary residence, second home, or even an investment property, and they come with a range of term lengths and interest rate options, including fixed and adjustable rates.

One of the key features of conventional loans is that they are conforming, meaning they adhere to the lending guidelines set by Fannie Mae and Freddie Mac, which are government-sponsored entities that buy and guarantee mortgages. These guidelines include criteria such as loan limits, credit score requirements, and debt-to-income ratios. Conventional loans can also be non-conforming if they don't meet these guidelines, but they typically come with higher interest rates.

Overall, conventional mortgage loans offer borrowers a versatile, approachable path to homeownership, with the potential for competitive interest rates and flexible repayment terms tailored to their individual financial situations.

General Conventional Loan Guidelines:

  • Steady fixed rate for the entire loan term
     
  • Conforming Loan Limit: $726,200 ($1,089,300 for one unit in High-Cost Areas)
     
  • Choose from 10, 15, 20, or 30-year terms
     
  • Minimum FICO score needed: 620
     
  • Works for Primary Residences, Second Homes, and Investment Properties
     
  • Low down payment options for qualified borrowers
     
  • Both Purchase and Refinance options available


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Pros of conventional mortgage loans:

  1. Flexible terms:
    Choose from 10, 15, 20, or 30-year loan durations.

  2. Fixed or adjustable interest rates:
    Pick the option that works best for your financial situation.

  3. No upfront mortgage insurance:
    Save money with no required insurance premium at closing.

  4. Potentially lower interest rates:
    Good credit scores can lead to better rates.

  5. Lower private mortgage insurance (PMI) rates:
    Compared to government-backed loans, conventional loans may offer lower PMI costs.

  6. Variety of property types:
    Use for Primary Residences, SecondHomes, and Investment Properties.

 

Cons of conventional mortgage loans:

  1. Strict credit requirements:
    A minimum credit score of 620 is usually needed, and better rates often require higher scores.

  2. Larger down payments:
    Typically, you'll need at least a 5% down payment, although 20% is recommended to avoid PMI.

  3. Less forgiving with financial hardships:
    Conventional loans may have fewer options for borrowers facing financial difficulties.

  4. Not government-backed:
    These loans don't come with the same level of protection as government-backed loans.

 

Good candidates for conventional mortgage loans:

  1. Borrowers with good-to-excellent credit scores (620 and above, at least)

  2. Those who can afford a sizable down payment

  3. Homebuyers looking for a primary residence, second home, or investment property

  4. Borrowers seeking flexibility in loan terms and interest rate options

  5. Individuals who prefer a mortgage without government involvement

Contact one of our knowledgeable loan specialists who can help guide you through our extensive suite of loan products for a mortgage solution tailored to meet your specific needs.