Conventional loans
The most common path, and the one worth getting right.
Conventional financing follows guidelines set by Fannie Mae and Freddie Mac rather than a government insurance or guarantee program. For a great many Florida buyers it is the straightforward, sensible answer — which is exactly why it deserves a proper comparison rather than a default.
What it is
Agency financing, not government-insured financing
A conventional mortgage is underwritten to guidelines published by Fannie Mae or Freddie Mac. Those two sets of guidelines are similar in outline and different in detail — and the differences matter more often than people expect. A file that is awkward under one can be comfortable under the other.
Conventional financing is used for primary residences, second homes and investment property, which makes it the widest-reaching category we work in. It is also the category where working through a brokerage branch is most quietly useful: the same conventional loan is offered by many lending sources, each with its own pricing, overlays and appetite.
Availability, eligibility and terms vary by borrower, property, lender and program, change over time, and are confirmed against current lender and agency guidelines. Nothing here is a commitment to lend.
Where it is used
Three different conventional conversations
Primary residence
The home you live in. Generally the most flexible conventional treatment, and the situation most first-time and move-up buyers are in.
Second home
A property you occupy part of the year. Occupancy has a specific meaning in the guidelines, and how the property is used affects both eligibility and terms.
Investment property
A property held to rent. Conventional financing is available for investment property, with different guidelines from a primary residence. See also investor and DSCR financing.
What actually drives the outcome
The things underwriting looks at
No numbers here on purpose — thresholds vary by program, lender and property, and they change. What does not change is which factors matter.
- How your income is documented
- Salaried, hourly, commissioned, bonus, self-employed, retirement or rental income are each analysed differently. Stability and continuance matter as much as the amount.
- Credit history, not just the score
- Payment history, how long accounts have been open, balances relative to limits, and any recent derogatory events all carry weight.
- Funds available and where they sit
- Down payment, closing costs and reserves, plus documentation of where the funds came from. Gifts are permitted in defined circumstances with specific evidence.
- The property itself
- Type, condition, appraised value, whether it is a condominium, and — in Florida especially — insurance availability and, for condominiums, the association's finances and structural condition.
- Mortgage insurance
- Conventional financing may involve private mortgage insurance depending on the amount financed relative to value. Whether it applies, what form it takes and when it may end are worth understanding before you choose a structure.
Common questions
Conventional questions people ask
Is conventional always better than FHA?
No — neither is universally better. Which one works out depends on credit profile, the amount being financed relative to value, the property, mortgage insurance treatment and current pricing. That comparison is worth doing properly rather than assuming. See FHA loans.
Are Fannie Mae and Freddie Mac interchangeable?
Not entirely. They are similar in structure and differ in specifics, and those specifics occasionally decide a file — particularly around self-employment, rental income, condominium projects and how certain debts are treated.
Can I use conventional financing for a condominium?
Often, yes, but the project matters as much as the borrower. Condominium financing depends on how the association is funded and managed, its insurance, and its structural condition. In Florida this has become one of the most common reasons a file needs early attention.
Worth comparing before you commit
Fifteen minutes on your situation and which conventional structure may suit it.