About Conventional Mortgage

A conventional mortgage or conventional loan is any type of homebuyer's loan that is not offered or secured by a government entity, like the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA) or the USDA Rural Housing Service, but rather available through or guaranteed by a private lender (banks, credit unions, mortgage companies) or the two government-sponsored enterprises, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

Conventional Conforming

A conforming mortgage is one whose underlying terms and conditions meet the funding criteria of Fannie Mae and Freddie Mac. Chief among those is a dollar limit, set annually by the Federal Housing Finance Agency (FHFA). Currently, in Puerto Rico, a loan must not exceed $424,100. Conventional mortgages are often the best for homebuyers who want the residence for investment purposes or as a second home; or who want to purchase a property priced over $500,000.

Conventional Conforming Mortgage Benefits and Highlights

  • Must have a credit score of at least 680 and, preferably, well over 700. The higher the score, the lower the interest rate on the loan, with the best terms being reserved for those over 740.
  • Have a debt-to-income ratio (DTI) (the sum of your monthly obligations compared to your monthly income) around 36%, and no more than 43%.
  • Requires at least 20% of the home's purchase price.

Conventional Non-Conforming

Non-conforming loans are mortgages that do not meet the loan limits discussed above, as well as other standards related to your credit-worthiness, financial standing, documentation status, among others. Fannie Mae cannot purchase non-conforming loans.

For a list of documents required upon closing, please click here: CHECKLIST

Our licensed and experienced mortgage professionals are ready to answer any questions that you may have. Please call us at (562) 203-6026