P & L STATEMENT
Purchase

A conventional mortgage loan is a popular financing option for purchasing a home, typically offered by private lenders like banks, credit unions, or mortgage companies. These loans are not insured or guaranteed by the government, unlike FHA or VA loans. Conventional loans usually come with two types of interest rates: fixed-rate and adjustable-rate. Fixed-rate mortgages provide consistent monthly payments over the loan’s term, while adjustable-rate mortgages (ARMs) start with a lower interest rate that can fluctuate over time. Borrowers often prefer conventional loans due to their flexibility and lack of upfront government fees. 

To qualify for a conventional mortgage, borrowers generally need a good credit score, a stable income, and a low debt-to-income ratio (DTI). Lenders typically require a credit score of at least 620, although higher scores may secure better interest rates. A down payment of at least 20% of the home’s purchase price allows borrowers to avoid private mortgage insurance (PMI), but it’s possible to obtain a conventional loan with a smaller down payment if the buyer agrees to pay PMI. Conventional loans are popular for those with a strong financial profile and who can meet these requirements. 

Conventional mortgage loans come in different terms, most commonly 15- or 30-year loans. The 30-year loan offers lower monthly payments but higher total interest over time, while the 15-year loan comes with higher monthly payments and lower interest costs over the life of the loan. Conventional loans offer flexibility in loan size and can be used for various types of properties, making them a go-to option for many homebuyers. However, because they don’t have government backing, the requirements to qualify are often stricter, making them more suitable for borrowers with more equity and higher credit profiles.