Conventional mortgages are the most common type of mortgage. That said, conventional loans do have stricter qualifications for your credit score and your debt-to-income (DTI) ratio.

You can buy a home with as little as 3% down on a conventional mortgage. You will also need a minimum credit score of at least 620 to qualify for a conventional loan. You can skip buying private mortgage insurance( PMI) if you have a down payment of at least 20%.

However, a down payment of less than 20% means you will need to pay for PMI. Mortgage insurance rates are usually lower for conventional loans than other types of loans (like FHA loans).

Conventional loans are a good choice for most borrowers who want to take advantage of lower interest rates with a larger down payment. If you can’t provide at least 3% down and you’re eligible, you could consider a USDA loan or a VA loan.

 

Pros Of Conventional Mortgages:

• The overall borrowing cost after fees and interest tends to be lower than an unconventional loan.
• Your down payment can be as little as 3% for qualifying loans.

 

Cons Of Conventional Mortgages:

• You have to pay PMI if the down payment is less than 20%.
• Stricter qualifications that require a minimum credit score of 620 and low DTI.

 

Home Buyers Who May Benefit:

• Borrowers with a stable income, who pay at least 3% down and have strong credit.