$50,000 to $10 million loans

Conventional mortgage loans, including jumbo loans, are popular choices for borrowers with good credit and stable financial backgrounds. They offer flexibility in terms of loan amounts and property types but come with more stringent qualification requirements compared to government-backed loans.

What to know about conventional mortgages

A conventional mortgage loan is a type of home loan that is not insured or guaranteed by the federal government. These loans are typically offered by private lenders such as banks, credit unions, and mortgage companies. They are the most common type of mortgage and can be used to purchase a primary residence, a second home, or investment property.

Credit requirements

• Typically require a good credit score (usually 620 or higher).
• Better credit scores can result in lower interest rates and better terms.

Down payment

• Standard down payments range from 5% to 20% of the home's purchase price.
• Private mortgage insurance (PMI) is usually required if the down payment is less than 20%.

Loan limits

• Conforming loans must meet the guidelines set by Fannie Mae and Freddie Mac.
• The 2024 conforming loan limit for a single-family home is $726,200 in most areas but can be higher in certain high-cost areas.

Interest rates

• Generally offer lower interest rates compared to non-conventional loans.
• Fixed-rate and adjustable-rate options are available.

Terms

• Common terms are 15, 20, or 30 years. - Fixed-rate mortgages have consistent monthly payments.
• Adjustable-rate mortgages (ARMs) have interest rates that can change over time.

What to know about jumbo mortgages

Jumbo loans are a type of non-conforming conventional mortgage. They exceed the loan limits set by Fannie Mae and Freddie Mac and are used to finance higher-priced or luxury properties.

Loan amounts

• Loan amounts exceed the conforming loan limits (e.g., $726,200 in most areas for 2024).
• Commonly used in areas with high property values.

Credit requirements

• Stricter credit requirements than conforming loans.
• Typically require a higher credit score, often 700 or higher.

Down payment

• Larger down payments are usually required, often at least 10% to 20% of the purchase price.
• PMI is generally not required, but some lenders might impose their own insurance requirements.

Interest rates

• Interest rates can be higher than conforming loans due to the larger loan amount and increased risk to the lender.
• Fixed-rate and adjustable-rate options are available.

Income and asset verification

• More stringent income and asset verification processes.
• Borrowers may need to show a higher income and substantial cash reserves.

Terms

• Similar to conforming loans, jumbo loans can be fixed or adjustable.
• Terms typically range from 15 to 30 years.