Conventional Loan

Can I get a conventional mortgage loan with 3% or 5% down?
Yes! There are conventional loan programs that allow for down payments as low as 3%. One of the biggest home-buying myths is that you need a 20% down payment to buy a home, which is simply not true.

Note: If your down payment is less than 20%, a Private Mortgage Insurance (PMI) payment will be required until you build sufficient equity in the home.

Is a conventional loan the best kind of home loan?
It depends on your unique financial situation and homeownership goals. One loan type isn’t inherently better than another; it comes down to what fits your specific needs. If you have solid credit, stable income, and funds saved for a down payment, a conventional loan may be a great fit.

For active U.S. service members, veterans, or surviving spouses, a VA loan might offer distinct advantages. For properties in rural areas, a USDA loan could be advantageous. Your Fairway loan advisor can evaluate your scenario and guide you toward the ideal option.

How soon can I refinance an FHA loan into a Conventional loan?
A primary motivation for refinancing from an FHA loan to a conventional loan is eliminating the monthly Mortgage Insurance Premium (MIP). If this is your goal, waiting until you reach 20% equity is often ideal, as conventional loans under 20% equity also require mortgage insurance.

Another common reason to refinance is when a homeowner significantly improves their credit score or debt profile. Upgrading your financial standing may qualify you for superior loan terms, making a conversion highly advantageous over the life of the mortgage. Your Fairway mortgage advisor can help you assess current guidelines and timing.

Can I finance my closing costs with a Conventional loan?
There are several strategies to address closing costs depending on your scenario:

• Seller Concessions: Negotiate with the seller to cover a portion of your closing costs. Market conditions (such as a seller’s market) may impact whether this is feasible.
• Lender Credits: Opt for adjusted loan terms where the lender provides credits toward your upfront closing costs.
• Gift Funds: Many conventional programs allow eligible gift funds from family members, employers, or approved donors to assist with closing costs.
• Down Payment Assistance (DPA): Explore state or county grants and forgivable loans. Rules vary by location and program.

Can I get a conventional loan if I owe taxes?
Owing back taxes is distinct from having an active tax lien. Tax debt simply means owing money to the government, whereas a tax lien indicates legal collection action has begun. An active IRS lien significantly impacts eligibility for a conventional mortgage through Fannie Mae or Freddie Mac. Talk with your loan advisor to understand options if you are on an active tax payment plan.