Buying
Conventional purchase
Fannie Mae and Freddie Mac conforming financing from 3% down, with mortgage insurance that ends rather than following you for the life of the loan.
The honest bitBest when your mid FICO is 700 or better. Below about 660 an FHA file usually prices lower, because conventional pricing is risk-based and FHA pricing is not.
What this programme actually is
A conventional loan is any mortgage written to Fannie Mae or Freddie Mac guidelines rather than to a government insurance programme. For most Richmond buyers it is the cheapest long-run option, because the private mortgage insurance is temporary: once the loan reaches 80% of the original value you may request cancellation, and at 78% the servicer must drop it automatically.
The trade is that conventional pricing is risk-based. Fannie and Freddie publish loan level price adjustments that move your rate by credit score, loan-to-value, occupancy, property type and cash-out status. A 760 score at 80% LTV and a 660 score at 95% LTV are not the same loan at a different rate; they are two very different price sheets.
As a broker I price the same file at several wholesale desks. The adjustments are identical because they come from the agencies, but the base pricing, the lender credits and the underwriting overlays are not, and that spread is usually where the real saving sits.
Conventional purchaseWhat is included when I run it
- Mid FICO pull across all three bureaus, with the middle score used for pricing
- Full income analysis: base, bonus, overtime, commission, RSU vesting schedules
- Automated underwriting run through both Desktop Underwriter and Loan Product Advisor
- Side-by-side pricing from at least four wholesale desks on the same lock day
- PMI quotes compared four ways: monthly, single premium, lender-paid and split
- A written cancellation plan showing the month PMI can come off at scheduled amortization
How the file moves
- 01Credit and income reviewWe pull credit once and read the tradelines before anything else. Two days.
- 02Automated underwritingDU or LPA returns the documentation waiver level, which decides how much paperwork you actually owe.
- 03Pre-approval letterIssued only after income and assets are verified, not after a form is filled in.
- 04Lock and discloseRate locked at the desk with the best net cost, initial disclosures out within three business days.
- 05Appraisal and conditionsAppraisal ordered day one of contract. Conditions cleared in batches, not one email at a time.
- 06Clear to closeClosing disclosure delivered at least three business days before signing, by federal rule.
Why people choose it
Mortgage insurance that ends
Request cancellation at 80% LTV. On a $340,000 loan that is roughly $142 a month back (sample figure).
No upfront insurance premium
FHA adds 1.75% of the loan to the balance on day one. Conventional does not.
Appraisal waivers are common
Strong files at 80% LTV often qualify for a value acceptance offer, saving around $650 and a week.
Second homes and investment
The only one of these programmes that finances a non-owner-occupied property.
What moves your price
| Factor | How it behaves |
|---|---|
| Credit score | Each 20-point band changes price. 740+ is the top tier on most grids. |
| Loan-to-value | 80%, 85%, 90% and 95% are separate price buckets, not a smooth curve. |
| Property type | Condos above 75% LTV carry a price adjustment; manufactured homes carry a larger one. |
| Reserves | Two to six months of PITI in the bank can move you into a lower DTI tier. |
Answers
Conventional purchase: common questions
Something not covered here? Call (804) 555-0146 and ask.
Yes, through HomeReady and Home Possible for qualifying incomes, and through the standard 97% LTV programme for first-time buyers. Income caps apply to the first two; the 97% option has none but prices slightly higher.
You may request cancellation once the balance reaches 80% of the original value, subject to a good payment history and sometimes a current appraisal. At 78% of original value, cancellation is automatic under the Homeowners Protection Act.
Only if part of the funds came from someone else. On conventional purchases of a primary residence the entire down payment may be gifted, with no minimum contribution from you.
Virginia sits at the national baseline. The examples on this site use $806,500 for a one-unit property, which is a sample figure; confirm the current limit before you rely on it.
Is this the right programme for you
Twenty-five minutes on the phone will settle it. If a different programme is cheaper for your file, I will say so.
Three wholesale quotes on the same day's pricing, before you choose.