Conventional Mortgages in Florida: What They Are and When They’re the Right Choice

What Is a Conventional Mortgage?

A conventional mortgage is a home loan that is not backed by a federal government agency. Unlike FHA, VA, or USDA loans, conventional mortgages follow guidelines set by Fannie Mae and Freddie; the two government-sponsored enterprises that purchase and securitize the majority of home loans in the United States. This makes them the most widely used mortgage product in the country.

For borrowers with solid credit and stable income, a conventional mortgage often delivers the most competitive terms of any loan program available.

What Are the Requirements for a Conventional Mortgage?

Conventional mortgages have more standardized requirements than government-backed programs:

1. Credit Score: A minimum score of 620 is typically required, though borrowers with higher scores qualify for better rates.
2. Down Payment: Conventional loans can be obtained with as little as 3% down for qualifying first-time buyers. A 20% down payment eliminates the need for private mortgage insurance.
3. Debt-to-Income Ratio: Most lenders prefer a DTI at or below 45%, though strong compensating factors can allow higher ratios.
4. Documentation: W-2s, tax returns, pay stubs, and bank statements are standard.

What Is Private Mortgage Insurance and When Can You Remove It?

If your down payment is less than 20%, conventional loans require private mortgage insurance (PMI), which protects the lender if you default. The key advantage of conventional mortgages over FHA loans is that PMI can be removed once you reach 20% equity in your home; whereas FHA mortgage insurance typically remains for the life of the loan.

Conventional Mortgages vs. FHA Loans: Which Is Better for You?

The right choice depends on your financial profile. FHA loans are more accessible for borrowers with lower credit scores or smaller down payments. Conventional loans are generally better for borrowers with a credit score above 680 who want to avoid long-term mortgage insurance.

Fixed-Rate vs. Adjustable-Rate Conventional Mortgages

Conventional mortgages come in fixed-rate and adjustable-rate (ARM) varieties. A fixed-rate mortgage locks your interest rate for the entire loan term, providing predictable payments. An ARM offers a lower initial rate that adjusts periodically after a fixed period.

Frequently Asked Questions About Conventional Mortgages

Can I get a conventional loan if I’m self-employed?

Yes, though documentation requirements are more thorough. Self-employed borrowers typically need two years of tax returns and a year-to-date profit-and-loss statement. If your tax returns don’t reflect your actual income, a Non-QM loan may be worth exploring.

What is a conforming conventional loan?

A conforming loan meets the size limits set by the FHFA each year, allowing it to be sold to Fannie Mae or Freddie Mac. Loans above this limit are considered jumbo loans and have different qualification requirements.

How long does it take to close a conventional mortgage?

Typically 30 to 45 days from full application submission, though this can vary based on appraisal timelines and documentation completeness.

Find Your Conventional Mortgage With Bravo Mortgage

Whether you’re purchasing your first home or your fifth, Bravo Mortgage has the tools and expertise to guide you through the conventional mortgage process. Explore our full range of mortgage products or contact us today to get started.