Conventional Loans Without The Boring Stuff
Conventional loans are often treated like the “standard” mortgage program. They can be ideal for move-up buyers, second homes, investors, and first time home buyers.
Hint: Conventional loans can be a powerful loan for first time home buyers with low to moderate income.
This is not a commitment to lend or extend credit. Conventional loan approval is subject to credit approval, income and asset verification, appraisal review, title review, underwriting approval, program guidelines, and applicable federal and state requirements.
Second Home 10%
Investment 15%
What Is A Conventional Loan?
A conventional loan is a mortgage that is not directly insured or guaranteed by a government agency like FHA, VA, or USDA. It is one of the most common loan types, but the best structure depends on the borrower, property, and goals.
Conventional May Make Sense When...
These are common situations where conventional financing belongs near the top of the list.
It May Fit When...
- Your credit profile is solid (700+, but there is flexibility for first time buyers).
- Your income is well documented.
- You have enough assets for a down payment and closing costs.
- You are buying a primary residence, second home, or investment property.
- You want to eliminate mortgage insurance.
Another Program May Fit When...
- You need to qualify with a higher debt ratio.
- You are eligible for VA financing.
- The property, income, and credit line up well for USDA.
- You are self-employed and need bank statement options.
- You are buying an investment property where DSCR makes more sense.
What Conventional Loans Usually Care About
The loan approval is built from several moving pieces. Ignore one piece and the blueprint gets ugly.
Credit Profile
There is no longer a minimum score requirement, but we typically want to see above average credit.
Income Stability
Underwriting needs to verify that income can be properly documented and is likely to continue.
Assets
Funds for down payment + closing costs need to be documented clearly. Be prepared to source non-payroll bank deposits in excess of 50% of your monthly income. Gift funds are allowed on primary & second homes.
Debt-To-Income
Debt ratios are capped at 50%.
Property Type
Eligible properties, ranked in order of easiest to most difficult: Single Family; Multi Family; Manufactured; Condos. Ineligible property types usually include 5+ units, shipping container homes, barndominiums, and commercial properties (among others).
Appraisal And Title
Just because conventional financing is used doesn't mean that property condition deosn't matter. Health and safety issues will still need to be addressed. Clear title is also required.
Hint: Appraisal waivers are sometimes granted with conventional loans.
The Conventional Pre-Approval Process
The goal is to build a file that makes sense before anyone gets emotionally attached to a "backyard oasis".
Review Needs, Wants, and Goals
We start with purchase price, down payment, timeline, property type, occupancy, and what monthly payment actually feels sane. This is when we take an application.
Collect Documents
Work history, income, asset, and credit documentation is reviewed to see if conventional financing is a viable option.
Compare The Alternatives
Conventional is compared against FHA, VA, USDA, jumbo, bank statement, DSCR, or assistance options when relevant.
Build The Strategy
We will put numbers on paper to ensure that you are getting best loan available. This will be the one that fits the budget, timeline, and long-term plan.
Important Conventional Loan Reminder
Conventional loans are common, but they are not automatic. Credit, income, assets, debt-to-income ratio, property type, mortgage insurance, appraisal, title, and underwriting requirements all matter.
The right structure may change based on the borrower’s full profile and goals. Sometimes conventional is the best fit. Other times it is just the first option many people think of.