What is a Conventional Loan

happy couple asking what is a conventional loan

Conventional Loans


At Phoenix Mortgage, we celebrate the great accomplishment of home ownership. We recognize that for most people, a home will likely be the largest material commitment and investment in their lifetime. Consequently, several prospective home owners often have more questions than answers, and are very concerned about making sure they walk wisely through this process. This is where we focus our decades of experience to helping individuals navigate through this milestone in their life. If you are asking, “What is a Conventional Loan?” or “How Does a Conventional Loan Compare to Other Loans?” we can help you answer these questions in relation to your unique circumstances.

What is a Conventional Loan?

A conventional loan is much different than other loans, in that it is not backed or insured by the government and government agencies, such as the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), the Farmers Home Administration (FmHA), or the United States Department of Agriculture (USDA).

Conventional loans are independently offered from lenders like banks and mortgage companies at their own financial risk. They are commonly called traditional loans. Many other loans measure themselves up to conventional loans as a commonly understood standard.

Conventional loans fluctuate in their characteristics depending on the lender. Some are fixed rate mortgages, and these are loans that remain at the same interest rate for the life of the mortgage. However, some are adjustable and the interest rates are subject to change and fluctuate in the market. These tend to have a term of 30 years.

Conventional loans cover more loan types than other loan products; they cover second homes and investment properties. They also can cover higher loan amounts than USDA, VA, and FHA. Conventional mortgage insurance is only monthly or single premium and it will automatically end at 80 % loan-to-value. Because conventional loans are drawn and lent in full risk without government insurance, lenders tend to raise eligibility standards for their own protection.

Thus, these are a few qualifying elements taken into consideration when lenders approve a loan:


  • Conventional loans often require higher down payments. One great advantage of conventional loans is that a private mortgage insurance is not required to be added to the mortgage if the new homeowner can afford paying 20% down payment of the principal.
  • Credit score is also a very significant factor of eligibility.
  • Unlike FHA loans, it may take more years of stable income after foreclosure to be eligible for a conventional loan.

  • Phoenix Mortgage Specialists, Inc. is proud to serve all our clients across Georgia and Alabama with premier conventional mortgage services specially tailored to their respective preferences and needs. It is our greatest pleasure to be a consistent source of professional guidance and expertise for every prospective homeowner and every individual preparing to walk through this milestone in his or her life. For questions beyond what is covered on this page, feel free to contact us. We would love to be of service to you in any way possible, and we would love to help answer any of your conventional loan-related questions or concerns. Thanks for choosing Phoenix Mortgage.

    TESTIMONIALS

    "When all other lenders told me that I could not buy a home, Phoenix Mortgage Specialists, Inc. told me I could. Thank you Phoenix Mortgage Specialists, Inc. for making my dreams of homeownership a reality."Tavaris R.
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