At Coast2Coast Mortgage, we offer competitive rates and flexible terms with our conventional loan options. These loans are perfect for primary residences, second homes, or investment properties, making them the most versatile mortgage solution available today.

What Are Conventional Loans?

Conventional loans are mortgage loans that are not insured or guaranteed by the federal government. Instead, they follow the guidelines set by Fannie Mae and Freddie Mac, the government-sponsored enterprises that buy mortgages from lenders and sell them to investors. This makes conventional loans an excellent choice for borrowers with good credit and stable income.

Key Benefits of Conventional Loans

Flexible Down Payment Options

Choose from various down payment options starting as low as 3% for qualified first-time homebuyers. This flexibility allows you to find a solution that fits your financial situation without depleting your savings.

Multiple Property Types

Finance primary residences, second homes, or investment properties with up to 4 units. Whether you're buying your first home, a vacation property, or building your real estate portfolio, conventional loans offer the versatility you need.

Competitive Terms

Get competitive rates and the option to eliminate Private Mortgage Insurance (PMI) once you reach 20% equity. This can significantly reduce your monthly payment over time, saving you thousands of dollars throughout the life of your loan.

Guidelines For Conventional Loans

Credit Score

Minimum 620, but 740+ recommended for best rates and terms. Your credit score is one of the most important factors in determining your interest rate and loan terms. The higher your score, the better rates you'll qualify for.

Down Payment

3-5% for primary homes, 10% for second homes, and 15-25% for investment properties. The amount you'll need to put down depends on the type of property you're purchasing and your overall financial profile.

Debt Ratio

Maximum 45% total monthly debt to income ratio. This means your total monthly debt payments (including your new mortgage) should not exceed 45% of your gross monthly income.

Income

Stable, verifiable income for the past two years is required. Lenders want to see consistency in your employment and income history to ensure you can maintain your mortgage payments over time.

Why Choose a Conventional Loan?

Conventional loans offer competitive rates and flexible terms, making them an excellent choice for borrowers with good credit and stable income. They're also typically faster to close than government-backed loans and offer more flexibility in property types and loan amounts.

For home loans up to $726,200 (in most areas), conventional loans provide an excellent balance of accessibility and favorable terms. Higher loan amounts are available in high-cost areas.

Frequently Asked Questions About Conventional Loans

What's the difference between conventional loans and government-backed loans?

Conventional loans are not insured or guaranteed by the federal government, while FHA, VA, and USDA loans are. This means conventional loans typically have stricter qualification requirements but can offer better terms for those who qualify.

Can I use gift funds for my down payment?

Yes, conventional loans allow gift funds for down payments, but the source must be properly documented. Typically, gifts need to come from family members, and you'll need a gift letter stating the funds don't need to be repaid.

How can I eliminate PMI on my conventional loan?

Once you reach 20% equity in your home, you can request to have PMI removed. This can happen through a combination of loan payments and home value appreciation. Some lenders automatically remove PMI when you reach 22% equity.

What are the advantages of a larger down payment?

A larger down payment can help you secure better interest rates, avoid PMI, lower your monthly payments, and potentially qualify for a larger loan amount. It also gives you immediate equity in your home.