In the mortgage market, one common form of mortgage loan is the conventional mortgage. The most important feature of a conventional mortgage loan is that the loan is not insured by the federal government. These loans meet the funding criteria of the federally sponsored enterprises such as the Fannie Mae and Freddie Mac. Among all the mortgage loans generated in the mortgage industry, 35-50% are conventional loans. Conventional mortgage loans can be of fixed rate or adjustable rate. Anyways, there are two types of conventional mortgage loans – conforming and non-conforming. Conforming loans are those loans which follow the guidelines set by Fannie Mae and Freddie Mac. Again, non-conforming loans are those loans which do not follow the Fannie Mae and Freddie Mac guidelines.
In order to become eligible for a conventional loan, you need to fulfill certain requirements. The standard debt to income ratio for a conventional loan is 28/36. A FICO score above 620 is helpful in obtaining an approval. Again, to become eligible for a conventional loan, your down payment amount should be around 5% to 20% of the sales price of the house. The rate of interest in a conventional loan depends upon the type of the loan that you are taking and your credit score. The rate of interest on conventional loans may vary widely from lenders to lenders. Anyways, if you take out a conventional mortgage loan, you need to ensure that the loan is affordable to you.