Conventional loans are mortgage loans not backed by a government agency like FHA Loans and VA Loans. Conventional loans are also known as Conforming Loans. Conventional mortgages allow for purchasing investment properties and second homes, unlike FHA and VA Loans which are strictly meant for borrowers who intend to live in the home they purchase as their primary residence. These types of loans also allow for a higher loan amount than most government-backed loans and the condition of the property doesn't have to be as pristine as say an FHA-financed home loan where the house needs to be in fully habitable condition for the loan to be approved and for the home to pass the appraisal inspection. 

Conventional  Loan vs FHA requires a much higher credit score, such as a minimum score of 620 on a Conventional Loan vs FHA, which requires only a 500 credit score in most cases with 10% down. Conventional Loan programs have the additional benefit of not requiring mortgage insurance with a 20% down payment, whereas an FHA Loan will have mortgage insurance attached for the life of the loan unless you put at least 10% down; however, many borrowers are choosing FHA Loans specifically because of the low minimum down payment requirement of only 3.5% down. 

There are two main types to consider when looking at a Conventional Loan, and those are conforming and non-conforming.  A non Conforming Conventional loan example would be a Jumbo Loan which typically goes up to a loan amount of 3 million dollars and is much higher than the Conventional Loan Limit in Clark County Nevada for 2024 which is $766,550 for a single-family home. Conforming Loans follow lending rules set by Fannie Mae, also known as the Federal National Mortgage Association, and Freddie Mac also known as the Federal Home Loan Mortgage Corporation. 

A conventional loan is a type of mortgage loan, which the government doesn’t guarantee or insure, it is backed by Fannie Mae and Freddie Mac, who are the entities that insure some of the loan amounts will be paid back to the lender if the borrower defaults. The borrower pays for private mortgage insurance (PMI) until they have 20% equity or put down 20% of the purchase price as the down payment.

These loans are more popular than government-backed financing because they are more flexible for well-qualified buyers. At the same time, they are riskier, too, since the federal government does not insure them. It is not quite as easy to qualify for these loan types as they require higher credit scores and more money down. 

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Conventional Loans vs FHA have higher loan limits, more versatility in the type of property you can purchase, and do not require private mortgage insurance with 20% down or after you have paid off 22% of your loan amount, in which case the PMI or private mortgage insurance will typically be automatically removed by the lender which will reduce your monthly payment. 

FHA vs Conventional Loan for example, will always carry private mortgage insurance no matter how much you pay towards your mortgage unless you choose to put at least 10% down rather than the typical 3.5% down payment required on an FHA loan. 

Conventional Loan programs also can be used to purchase a vacation home or investment property which is one of the most common uses for a Conventional Mortgage Loan vs FHA Loan, which is strictly to be used to purchase a home you intend to live in. 

 Conventional Loan requirements for credit scores are higher than an FHA or VA loan, and most lenders require a minimum credit score of at least 620 in order to qualify for a Conventional Home Loan in Las Vegas.

Conventional mortgages in Nevada differ from VA – Veteran’s Administration, FHA – Federal Housing Administration Loans. Freddie Mac or Fannie Mae typically underwrites conventional loans in Las Vegas, two federally monitored programs that are secondary real estate loan markets.  Both help people get into their own homes with lower down payments. 

Conventional mortgages are also a good option for someone looking to refinance a home with equity in the property. A mortgage broker will often bring several different loan packages to you for consideration. They may or may not require mortgage insurance, there may be different down payment percentage requirements, and they can work with various FICO scores. 

PIF Lending your mortgage broker Las Vegas– will share any other stipulations you need to know about when they explain the loan package options to you.

Conventional Loan Limits for Clark County Nevada in 2024, which is the County where Las Vegas and Henderson are located. 

$766,550 for Single Family Homes 

$981,500  for a 2 unit or Duplex

$1,186,350  for a 3 unit or Triplex

$1,474,400  for 4 living units. 

Unlike using an FHA Loan to purchase a multi-unit property which requires you to actually intend to live inside one of the units, a Conventional Loan does not have that requirement. You can use a Conventional Loan to buy as many investment properties as you can possibly qualify for and afford.

It's a very common misconception that you need to put 20% down on a Conventional Mortgage Loan. The truth is that there are many options for how much money you need to put down on a Conventional Home Loan. 

You can put...

3% down

5% down

15% down

20% down 

Your down payment doesn't have to be an exact percentage as long as you meet the minimum requirement you can choose to put any additional dollar amount towards your loan. For example, if you are doing a 3% down Conventional Loan and your purchase price is $300,000, your down payment would be $9,000, but if you wanted to put down $10,000, that would be fine.  

On a Conventional Loan, the main thing to understand about your down payment is that the amount of money you put down will affect the amount of private mortgage insurance you pay, the interest rate, and the total monthly payment. If you put 20% down, for example, you will not have private mortgage insurance, also known as PMI which will lower your total mortgage payment. If you put 3% down, your interest rate will be a bit higher than if you put 15% or 20% down because the risk to the lender providing the home loan is greater.

 Sometimes, depending on your circumstances, putting down slightly less than 20% will actually be the best option because there will be a small amount of mortgage insurance on the loan, which makes the mortgage less risky to the lender since that private mortgage insurance will pay the lender back a portion of your home loan if you default on your conventional mortgage. Your mortgage insurance will still be automatically removed once you reach 22% equity in the property, and you can request it to be removed once you have 20% equity paid into your home loan. Having a savvy expert Mortgage Broker in Las Vegas that has your best interests in mind is so important for all the reasons we mentioned above. Let us help you decide what the perfect loan and down payment for you.

702-800-4664 

In most cases, the minimum credit score requirement for a Conventional Loan is a 620, although there may be some exceptions, especially when it comes to portfolio loans or conventional loans that are non-conforming, which means they do not get sold on the secondary market and are instead serviced by the lender. When it comes to Conventional Financing, the better credit score you have, the lower your interest rate will be, and the lower your private mortgage insurance will be if you are putting less than 20% down on your conventional home loan. A credit score of 740 and above is considered top-tier credit and will get you the absolute best interest rate possible on your conventional loan.

A Jumbo Loan is a Non-Conforming Conventional Loan. Jumbo Loans are used to purchase properties that cost more than the conforming loan limits allow, which is $766,550

At PIF Lending, we have a Jumbo Loan program that's typically unheard of, which only requires a 10% down payment of up to 3 million dollars.

Most Jumbo Loans have a loan limit of $3 Million Dollars and require a 20% down payment and a credit score of at least 700. Jumbo loans over a purchase price of $1.5 million may require a credit score of at least 720 

Jumbo Loans depending on how high the purchase price is may require a much lower debt-to-income ratio than a conforming Conventional Loan which is typically 50%. 

Depending on the lender and loan amount, most Jumbo Loans require the borrower to have a certain amount of money in the bank saved as cash reserves. These cash reserves let the lender know that the borrower can still afford to make the monthly mortgage payment even if they have a slight reduction in income or a bad month in their business. 

The answer to this question depends on when exactly the bankruptcy or foreclosure occurred and what the circumstances were. In general, to get a Conventional Loan after a foreclosure you need to wait 7rs. If there was an extenuating circumstance and you can prove that to the lender, you may be able to purchase a home with a conventional mortgage after 3yrs  with a 10% down payment. The lender will want to see that you had good credit and payment history prior to the foreclosure and have had a good repayment history after the extenuating circumstance passed. An example of this would be if you were severely injured in a car accident and spent a year in the hospital unable to work or pay your mortgage but after you recovered you went back to work and started paying your other bills on time. 

To be eligible for a Conventional Home Loan after a Bankruptcy, there is a 4yr waiting period, but exactly when that waiting period starts depends on the type of Bankruptcy you filled. 

For a Chapter 7 Bankruptcy, the waiting time period starts at the date of discharge or date of dismissal. Once this time period has passed, if you can demonstrate that you have rebuilt your credit and have a good payment history, you can be eligible for another conventional home loan. 

For a Chapter 13 bankruptcy, the timeline starts at the date of filling and 2yrs from the date of discharge. Once these waiting periods are met, as long as you are back on track financially and making your payments on time, you could be eligible for a new conventional loan.