Conventional loans adhere to the guidelines set by Fannie Mae and Freddie Mac. They may have either fixed or adjustable rates. Conventional loans can be used as your mortgage solution for primary residences, second homes, and investment properties. Conventional loans have occupancy stats requirements, loan to value requirements, and credit score requirements.
More than half of all new mortgage loans are conventional loans. As of 2022, loan amounts $647,200 or lower are considered conforming. Some high-cost counties are higher. See my state county list for Utah and California by going to the Utah Conforming loan limits or California Conforming loan limits pages.
Why Choose the Conventional Loan Solution?
- Low down payment on a primary residence purchase.
- Debt-to-income ratio as high as 49%.
- Cancellable mortgage insurance at 80% loan to value.
- Loan amounts up to $647,200 in 2022.
- Choose between a 30, 25, 20 and 15-year term.
- High-cost counties offer higher conforming limits.
- Fixed rate for the life of the loan.
- Adjustable-rate and fixed mortgages available.
- Only pay more if taxes or insurance goes up.
- Lower closing costs.
What is a Non-Conforming Loan?
A non-conforming conventional loan is one that doesn’t adhere to Fannie Mae or Freddie Mac guidelines and isn’t backed by a government loan, including FHA, USDA, or VA.
One of the more common types of non-conforming loans is the jumbo loan solution. A jumbo loan comes with higher loan limits than conforming loans. There are other types of non-conforming loans that may help the borrower qualify for property that they couldn’t with a conforming loan.
Why Are Conventional Loans So Popular?
Unlike most government loan solutions, conventional loans do not have a mandatory up-front mortgage insurance premium (UFMIP). One example is the FHA home loan solution which requires 1.75% of the loan amount as a financeable UFMIP. On a $350,000 loan, that would add $6,125 to the loan amount.
Another advantage is your conventional mortgage insurance is cancellable as early as 80% Loan-to-Value (LTV). Your MI automatically cancels at 78% LTV. If you start your Conventional loan with an 80% LTV, there's no mortgage insurance needed.
You may experience lower appraisal fees going conventional over FHA or other government loans backed by HUD. Since HUD insures its mortgages on behalf of lenders, qualified and approved borrowers, it sets its own guidelines and rules pertaining to appraisals as well as other guidelines.
More options. Using a conventional mortgage as your solution provides more options including shorter loan terms and larger loan limits. A conventional loan usually offers an option to pay taxes and insurance directly, without adding them to your monthly mortgage payment through an escrow account. If you'd like the flexibility and freedom to pay taxes and insurance separately, a conventional mortgage is a great choice.
Calculate My Utah or California Conventional Mortgage Payment
Try my Conventional Utah mortgage calculator. The costs are estimated for Utah property tax, hazard insurance and mortgage insurance to give you a good idea of your mortgage payment.
In California? Consider increasing the property tax from 0.7% to 1.25% for a closer look into your California mortgage payment estimate.
Tip: Use the "Add Extra Payments" option with the calculator above see how adding $50, $100 or more to your monthly payment will drastically shave years off your loan!
Disclaimer: Loan terms and limits subject to change. This page is meant for educational purposes and is not a commitment to lend. To qualify for a home loan, please speak to Scott Buehler or apply online.