Conventional Mortgage Guide
Your Path to Homeownership & Refinancing
Buying a home or refinancing an existing one is a big step, and choosing the right mortgage is key to making it a smooth process. A conventional mortgage is one of the most popular home loan options, offering flexibility and competitive rates. Whether you're a first-time homebuyer, looking to move up, or considering refinancing or cashing out equity, this guide will help you understand your options.

What is a Conventional Mortgage?
A conventional mortgage is a home loan that is not backed by the government. Instead, it follows guidelines set by Fannie Mae and Freddie Mac, two major mortgage companies. These loans typically require a good credit score, stable income, and a down payment, but they offer low interest rates and flexible terms.
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Conventional Loans for Home Purchases
First-Time Homebuyer Programs
If your buying your first home, you may qualify for special programs that make homeownership more affordable.
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HomeReady & Home Possible – Designed for low- to moderate-income buyers, these programs offer lower mortgage insurance costs and flexible credit requirements.
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Borrower Smart & Borrower One – Special programs that provide grants and lender credits to help with down payments and closing costs.
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Low Down Payment Options – Some conventional loans allow as little as 3% down.
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Down Payment Assistance – Many state and local programs can help with your down payment and closing costs.
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Better Interest Rates – First-time buyers with good credit may qualify for competitive rates.
Conventional Loans for Refinancing and Cash-Out
If you already own a home, a conventional mortgage can help you refinance for a lower rate or access your home’s equity:
Rate & Term Refinance
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Lower Your Monthly Payment – If interest rates have dropped, refinancing may help reduce your mortgage payment.
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Shorten Your Loan Term – Switching from a 30-year loan to a 15-year loan can help you pay off your home faster and save on interest.
Cash-Out Refinance
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Access Your Home Equity – Tap into your home’s equity to finance home improvements, debt consolidation, or other expenses.
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Higher Loan Amounts – If your home’s value has increased, you may qualify for larger cash-out amounts.
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No Mortgage Insurance – If you have at least 20% equity, you can refinance without PMI.
Benefits of a Conventional Loan
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Lower Interest Rates – Compared to government-backed loans, conventional mortgages often have better rates for well-qualified buyers.
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Flexible Loan Terms – Choose from 15, 20, or 30-year fixed loans or adjustable-rate mortgages (ARMs).
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No Upfront Mortgage Insurance – Unlike FHA loans, conventional loans don’t require upfront mortgage insurance premiums.
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More Property Options – You can buy a primary home, second home, or investment property.
How to Qualify for a Conventional Loan
To get the best rates and terms, you’ll need:
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A credit score of at least 620 (higher scores get better rates)
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A debt-to-income ratio (DTI) under 45% (exceptions to 4.99%) *This is based on gross income.
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A down payment of at least 3% (or 20% to avoid PMI)
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Steady income and employment history

Get Started with Catch mortgages
At Catch Mortgages, we make the mortgage process simple and stress-free. Whether you’re a first-time homebuyer, looking to upgrade, or considering a refinance or cash-out option, our team is here to help you find the best loan for your needs.
Ready to take the next step? Contact us today to get pre-approved!
Frequently asked questions
Are You Really a "First-Time" Home Buyer? (Spoiler: You Might Be!)
Are You Really a "First-Time" Home Buyer? (Spoiler: You Might Be!)
Think you missed your shot at first-time buyer perks because you owned a home before? Good news – you might still qualify! Here's the deal:
You're considered a first-time buyer if:
- You haven't owned a home in the last 3 years
- You're divorced and only owned a home with your ex
- You owned a mobile home
- You owned a home that wasn't up to code and would cost too much to fix
Why Should You Care? Being a "first-time" buyer can save you serious money through:
- Lower down payments (sometimes as little as 3.0% with Conventional Loans)
- Down payment assistance (free money – yes, really!)
- Special tax breaks
- Access to better loan terms
Quick Tip: Each program has its own rules, so don't assume you're not eligible. Many people qualify without realizing it!
How Much Do You Really Need for a Down Payment? (Less Than You Think!)
Gone are the days when everyone needed a 20% down payment. Here's the real scoop on what you might need in 2024:
Minimum Down Payments by Loan Type:
- FHA Loans: As little as 3.5% down with a credit score of 580+
- Conventional Loans: Starting at 3% for qualified buyers (sometimes as little as 0% Down)
- VA Loans: 0% down for veterans and service members
- USDA Loans: 0% down for homes in eligible rural areas
Let's Break That Down in Real Money: On a $300,000 home, that could mean:
- FHA: $10,500 down (at 3.5%)
- Conventional: $9,000 down (at 3%)
- VA or USDA: $0 down
But Here's What You Should Know:
- Lower down payment = higher monthly payments
- You'll likely pay mortgage insurance with less than 20% down
- A bigger down payment gives you a better chance in competitive markets
- Local first-time buyer programs might help cover your down payment
Pro Tip: Don't empty your savings for a down payment! You'll still need cash for:
- Closing costs (2-5% of loan amount)
- Moving expenses
- Your emergency fund
- Initial home repairs
The Bottom Line: While you can get into a home with as little as 0-3.5% down, aim for what works for your monthly budget and long-term goals. Sometimes a bigger down payment makes sense, but don't let the old "20% rule" scare you away from homeownership!
Want to run the numbers for your situation? Most lenders offer free consultations to break down your specific options.
What Credit Score Do You Need to Buy a House? (A No-BS Guide)
Here's What Different Loans Actually Require in 2024:
- FHA Loans: 580+ for a 3.5% down payment (500-579 needs 10% down)
- Conventional Loans: Usually 620+, but 740+ gets you the best rates
- VA Loans: No official minimum, but most lenders want 620+
- USDA Loans: Most lenders look for 640+
The Real Talk About Credit Scores:
- The minimum score isn't always enough - higher scores = better rates
- A 700+ score puts you in a sweet spot for good options
- Lenders look at more than just your score (income, debt, job history)
- One late payment won't kill your chances
Quick Ways to Boost Your Score:
- Pay bills on time (set up auto-pay!)
- Keep credit card balances below 30% of your limit
- Don't apply for new credit while house hunting
- Check your credit report for errors (it's free!)
The Truth About Bad Credit: If your score isn't great, don't panic. You can:
- We can work to improve your score for FREE
- Take 6-12 months to improve your score
- Look into FHA loans
- Consider rent-to-own options
- Partner with a co-borrower
Bottom Line: While you can technically buy a house with a 500 credit score, aim for at least 620 to have more options and better rates. The difference between a 620 and 720 score could save you hundreds each month on your mortgage!
What's a Soft Credit Check?
Think of it like a background peek at your credit that doesn't leave a mark. It's similar to when you check your own credit score or when employers run a credit check. The big deal? These don't hurt your credit score!
The SAFE Way: A Soft Credit Check Pre-Approvals
- Same strength as traditional pre-approval
- Doesn't ding your credit score
- Usually takes minutes, not days
- Lenders verify your info without hard inquiry
- Just as valid for making offers
Why This Matters:
- You can shop multiple lenders without hurting your credit
- Get a real pre-approval letter faster
- Know exactly what you qualify for
- Make stronger offers on homes
- Save your hard credit checks for the final loan application
Pro Tip: Even with soft credit checks, save all your mortgage shopping for a 14-45 day window. When you do get hard credit pulls for your final loan, they'll all count as one inquiry if done within this timeframe!
Dont want pesky Cold Calls: www.optoutprescreen.com
You can opt out of Electronic Pre-Screened / Pre-Approved Credit Offers for 5 years. When you do a HARD Credit Pull your DATA is sold by the credit bureaus (Experian, Transunion, Equifax) to bottom feeding bait and switch mortgage companies.
What Are Closing Costs? (And How to Pay Less for Them!)
The Too Long; Didn't Read:
Closing costs are all those extra fees beyond your down payment. But here's the good news - you might not have to pay them all yourself!
Show Me the Money: What's Included? Typical closing costs run 2-5% of your loan amount. On a $300,000 house, that's $6,000-$15,000 for stuff like:
- Lender Fees: Application, underwriting, processing
- Third-Party Fees: Home inspection, appraisal, title search
- Government Fees: Recording fees, transfer taxes
- Insurance & Taxes: Property tax, homeowners insurance
- Title Insurance: Protection against ownership claims
The Game-Changer: Seller Concessions
Here's the hack most people don't know about:
For Conventional Loans:
- Sellers can pay up to 3% of your closing costs
- On a $300,000 home = up to $9,000 in help
For FHA Loans:
- Sellers can kick in up to 6%
- On a $300,000 home = up to $18,000 in help
Pro Tips for Getting Sellers to Pay:
- Ask! Many sellers expect to help with closing costs
- Use it as a negotiation tool instead of lowering the price
- Markets matter - harder to get in competitive situations
- Get your agent to pitch it right
Other Ways to Handle Closing Costs:
- Lender credits (trading a higher rate for lower costs)
- First-time buyer assistance programs
- First-Time Buyer Grants (sometimes $1,500 - $4,500 in FREE money)
- Negotiate individual fees with your lender
The Real Talk: Yes, closing costs suck. But don't let them scare you away from buying. Between seller concessions, lender programs, and smart negotiating, there are legit ways to reduce what you pay out of pocket.
Quick Action Steps:
- Ask lenders for official Loan Estimates
- Compare fees between lenders (they can vary by thousands!)
- Research local down payment assistance programs
- Talk strategy with your agent about seller concessions
Remember: In today's market, sellers often expect to help with closing costs - you just need to make it part of your offer strategy!
First home? We'll make getting your mortgage simple.