What Are Conventional Loans?

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.

What Is a Loan Conventional?

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.

Advantages of Conventional Loans

• No upfront mortgage insurance fees (unlike FHA loans)
• Flexible property types (condos, second homes, investment properties)
• Potentially lower total loan costs for high-credit borrowers

However, if your down payment is under 20%, private mortgage insurance (PMI) is usually required until you build enough equity.

What Other Loan Options Are Available?

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.

FAQs about Conventional Loans

Can I Get a Conventional Loan With Bad Credit?

It’s harder but possible. Generally, conventional loans favor borrowers with credit scores of 620 and higher.

What Are the Benefits of a Conventional Loan?

They often offer lower overall borrowing costs for buyers with good credit and provide more flexibility for property types.