A conforming mortgage follows the guidelines put in place by Freddie Mac and Fannie Mae, including loan limits.
These mortgages include both “jumbo loans” which exceed the loan limits imposed by government-backed agencies, niche products for unusual circumstances and riskier products that are much less common these days.
The standard down payment for a conventional loan is anywhere between 3 and 25 percent of a home's value depending on the borrower's credit and financial condition. For example, a $100,000 home could require a $20,000 down payment. We allow a borrower to put down as little as 3 percent at closing. Just keep in mind, this option is typically only available to those who meet additional requirements, like being a first-time home-buyer. Remember, with a larger down payment, homeowners also enjoy immediate equity in their home.
To qualify for a conventional loan, your monthly mortgage payments and monthly non-mortgage debts must fall within certain ranges. We require that your monthly mortgage payments, when combined with your other monthly debt payments (car loans, student loans, credit card bills, etc.), may be limited to a maximum of 50 percent of your gross monthly income.
Your credit score also plays an integral role when qualifying for a conventional loan. In fact, most lenders require a minimum FICO credit score of around 620 to obtain approval.