What is a Conventional Home Loan?

Conventional Home Loan

A conventional home loan is a type of mortgage that is not backed by a government entity. Instead, it's guaranteed by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

First-time homebuyers can put down as little as 3% down payment. However, if you can give a 20% down, the PMI or premium mortgage insurance will be automatically waived.

You need to have at least a 620 credit score and a  debt-to-income ratio of 45% or less to have a higher chance of approval with a conventional loan. Nonetheless, a conventional loan has a higher loan limit compared to other mortgages. It also offers better flexibility when it comes to loan terms and rates.