Conventional Loans in Charlotte, NC
A conventional loan is the most common type of mortgage for buying or refinancing a home. Ram Mortgage, LLC offers conventional financing to buyers and homeowners in Charlotte, NC and the surrounding area, and our loan officers can help you decide whether a conventional loan fits your goals.
How conventional loans work
- Not insured or guaranteed by a government agency such as FHA, VA, or USDA
- Fixed-rate terms such as 30-year and 15-year, as well as adjustable-rate (ARM) options
- Can be used for a primary residence, a second home, or an investment property
- Private mortgage insurance (PMI) is typically required with less than 20% down, and can generally be removed once you reach the equity required by program guidelines
Loans that follow Fannie Mae and Freddie Mac guidelines are called conforming loans and must stay within the annual conforming loan limit. Larger loan amounts are financed with jumbo loans.
What lenders look at
Credit history
Your credit score and payment history affect whether you qualify and the pricing you are offered. Conventional programs generally weigh credit more heavily than FHA.
Debt-to-income ratio
Lenders compare your monthly debts, including the new mortgage payment, to your gross monthly income to confirm the payment is affordable.
Income and employment
Expect to document steady income with pay stubs, W-2s, or tax returns, depending on how you are paid.
Down payment and reserves
The amount you put down affects your loan-to-value ratio, mortgage insurance, and pricing. Some programs also look at savings left after closing.
The property
An appraisal confirms the home's value, and the property type and how you will use it (primary, second home, or investment) affect the terms available.
Conventional or FHA?
FHA loans can be more flexible on credit history, while conventional loans can be used for second homes and investment property and let you remove mortgage insurance once you build enough equity. Buying for the first time? Read our first-time home buyer guide, or see which loan is right for you.
Conventional loan FAQs
What is a conventional loan?
A conventional loan is a mortgage that is not insured or guaranteed by a government agency. Most conventional loans are conforming loans that follow Fannie Mae and Freddie Mac guidelines and stay within the annual conforming loan limit for the county.
Do I need 20% down for a conventional loan?
No. Many buyers put down less than 20%. With less than 20% down, private mortgage insurance (PMI) is typically required. The minimum down payment depends on the program, the property, and your qualifications.
Can private mortgage insurance be removed?
On most conventional loans, PMI can be cancelled once you reach the equity level set by program guidelines and federal rules, either through payments or, in some cases, a new appraisal.
What if my loan amount is above the conforming limit?
Loan amounts above the conforming loan limit are financed with a jumbo loan, which has its own guidelines for credit, down payment, and reserves.
Should I choose a conventional loan or an FHA loan?
It depends on your credit, down payment, and plans for the home. FHA can be more flexible on credit history, while conventional loans can be used for second homes and investment property and allow PMI to be removed. A loan officer can compare both for your situation.
The first step is usually a mortgage pre-approval, so you know your price range before you make an offer.
Eligibility subject to AUS findings and program guidelines. This information is not a commitment to lend.
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