Conventional Loans

Conventional loans are one of the most popular mortgage options for homebuyers in Virginia and across the U.S. They offer flexibility, competitive rates, and lower long-term costs for qualified borrowers. Backed by Fannie Mae and Freddie Mac, these loans are ideal for buyers with stable income and good credit.

How Conventional Loans Work

A conventional loan is not government-backed. Instead, lenders follow guidelines set by Fannie Mae and Freddie Mac.

This means:

• More flexibility in property types

• Lower overall borrowing costs

• Options for primary, second homes, and investment properties

Basic Requirements

• Credit score: typically 620+

• Down payment: as low as 3%

• Stable income and employment

• Debt-to-income ratio usually below 45%

Why Choose a Conventional Loan

• No upfront mortgage insurance fee

• PMI can be removed over time

• Lower monthly payments compared to FHA in many cases

Conventional vs. conforming

Conventional loans are often erroneously referred to as conforming mortgages or loans. While there is overlap, the two are distinct categories.

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). So, while all conforming loans are conventional, not all conventional loans qualify as conforming. For example, a jumbo mortgage is a conventional mortgage but not a conforming mortgage, because it surpasses the amount that would allow it to be backed by Fannie Mae or Freddie Mac.