Date Published: 15.04.2025
Author: Emily Sarnes
When shopping for a mortgage, many buyers turn to conventional loans. These traditional mortgages aren’t backed by a government program but remain a popular option for those with solid credit and a stable financial history. Let’s explore how conventional loans work and when a short-term loan might come in handy.
Conventional loans are originated and serviced by private lenders, with guidelines typically set by Fannie Mae and Freddie Mac. They often require higher credit scores, stable income, and a down payment — though some programs allow as little as 3% down for first-time buyers.
However, if your down payment is under 20%, private mortgage insurance (PMI) is usually required until you build enough equity.
If you’re short on cash for immediate moving expenses, temporary housing, or home repairs while waiting for your mortgage to finalize, a short-term loan can bridge the financial gap. They’re fast, flexible, and ideal for expenses that don’t justify tapping into a larger, long-term mortgage.
It’s harder but possible. Generally, conventional loans favor borrowers with credit scores of 620 and higher.
They often offer lower overall borrowing costs for buyers with good credit and provide more flexibility for property types.
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