Conventional Loans

For many homebuyers, a Conventional loan holds the key.

Wondering which type of mortgage is best for you? Many homebuyers prefer Conventional mortgages because they offer more flexibility and the costs accompanying the loan are often less expensive.

Conventional loans are not insured or guaranteed by the government. Instead, the loan is backed by private lenders. This can make them harder to qualify for. If you have a solid credit score and little debt, a Conventional loan is a great option. Even if that’s not the case, there’s still a chance you can qualify.

Another reason people like Conventional mortgages is because they allow you to purchase a more expensive home. There are two types of Conventional loans: conforming and non-conforming. In order to be considered conforming, the loan must meet the guidelines set by the Federal Housing Finance Agency (FHFA). Good news — the FHFA raised conforming loan limits again this year. The 2021 maximum conforming loan limit is $548,250. And in areas with higher home prices, the limits are even greater. We can let you know what the maximum is in your neighborhood.

Conventional loans that exceed the loan limit are called non-conforming or Jumbo loans. Embrace offers our own Jumbo loans. Ours are less complicated and often easier to qualify for. We offer as little as 10% and 20% down for loans up to $1.5M and $2.5M, respectively, and have options for buyers with credit scores below 740.

Conventional and FHA loans are the two most common types of mortgages in the country. Understanding the requirements for each can help you figure out which one is right for you.

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Conventional

Conventional loans conform to Fannie Mae/Freddie Mac guidelines and are a financial agreement between the lender and the borrower. Conventional loans are not government-backed so they may be harder to qualify for than FHA loans, but they typically have lower costs.

May offer lower interest rates
No private mortgage insurance (PMI) with 20% down payment. Shorter-term PMI with less than 20% down.
More expensive home purchases possible
Available as fixed-rate and adjustable-rate mortgages
Require minimum credit score of 620
Often require 20% down payment. Some gift funds allowed.
May require less documentation and therefore take less time to process

FHA

An FHA loan is administered by the Federal Housing Administration (FHA) and is easier to qualify for than a Conventional loan. With the FHA guaranteeing the loan, lenders are more willing to approve applications, but FHA loans are usually more costly.

Down payments as low as 3.5%
Single-family homes, condos, multi-unit properties, and manufactured homes
Mortgage insurance is required
Entire down payment and closing costs can sometimes be covered with gift funds
Extra funding available for renovations and repairs with FHA 203(k) program
FICO(R) Scores as low as 580 may qualify

Frequently asked questions

Can you refinance with a Conventional loan?

The answer is yes. You can refinance with a Conventional loan and lower your current mortgage payment, change terms, or convert from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage. The two most important things you’ll need to refinance are a good credit score and a successful appraisal of your house. A rate and term refinance could deliver big savings.

What does it mean to be pre-qualified?

A simple first step in the mortgage process is getting pre-qualified. Embrace Home Loans can pre-qualify you over the phone or online. We’ll go over your information and discuss your goals. Shortly thereafter you’ll get your pre-qualified amount — the amount for which you might expect to be approved for a loan.

How do interest rates affect my mortgage?

High interest rates bring higher monthly payments and increase the overall interest you’ll pay over the life of your loan. A low interest rate saves you money in both the short and long term. Sometimes a bigger down payment can help you get a lower interest rate. Keep in mind that the money you pay in interest doesn’t ever go toward paying off the principal, so it’s smart to get the lowest interest rate possible and then pay off your house as quickly as you can.

What's the best way to get started?

The best way to start any mortgage process is with the help of a lender that's 100% on your side — and that's Embrace Home Loans. Simply call 800-333-3004 or fill out our quick, no-obligation and confidential GET A QUOTE FORM now. Your Mortgage Specialist will start working right away to find your ideal mortgage and will be with you every step of the way. This streamlined, personalized approach means the entire process will be as simple and stress-free as possible. In fact, it can all be wrapped up in as little as 21 days after receiving all your documents. There's just no better way to take the next steps toward a better financial future.

How do you qualify for a loan?

When you first meet or speak with a loan officer, they’ll just want to learn a few basics about you and your financial situation. Once the loan process gets started, you’ll need to provide proof of where you work, your income, any debts you may have, your assets, and how much you plan to put toward a down payment. Our loan officers will clearly explain your mortgage options and answer all your questions so you feel confident in your decision.

"Sam and his team were very helpful and communicated well. Once all of the documents were received, the rest of the process was a breeze."

- Angel, VA

30-Year Fixed-Rate Refinance Mortgage Example:
The payment on a $225,000 30-year fixed-rate cash out refinance loan at 3.250% with a 70% loan-to-value (LTV) is $979.21 with 2 points due at closing. The Annual Percentage Rate (APR) is 3.520%. This assumes a FICO score of at least 690. Payment does not include taxes and insurance premiums, which will result in a higher monthly payment. Interest rates and annual percentage rates (APRs) are based on current market rates and are subject to change without notice. Rates offered may be subject to pricing add-ons related to property type, loan amount, LTV, credit score, and other variables. Mortgage insurance may be required for LTV >80%. If mortgage insurance is required, the mortgage insurance may increase the APR and the monthly payment. Stated rate may change or not be available at the time of loan commitment or lock-in.

30-Year Fixed-Rate Purchase Mortgage Example:
The payment on a $225,000 30-year fixed-rate purchase loan at 3.125% with a 70% loan-to-value (LTV) is $963.84 with 2 points due at closing. The Annual Percentage Rate (APR) is 3.390%. This assumes a FICO score of at least 710. Payment does not include taxes and insurance premiums, which will result in a higher monthly payment. Interest rates and annual percentage rates (APRs) are based on current market rates and are subject to change without notice. Rates offered may be subject to pricing add-ons related to property type, loan amount, LTV, credit score, and other variables. Mortgage insurance may be required for LTV >80%. If mortgage insurance is required, the mortgage insurance may increase the APR and the monthly payment. Stated rate may change or not be available at the time of loan commitment or lock-in.