Conventional Loans in New Jersey, Pennsylvania & Florida

Plain-English guide

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What makes a loan "conventional"

A conventional loan is any mortgage that isn't insured or guaranteed by a government agency like the FHA, VA, or USDA. Most conventional loans are "conforming," which means they follow guidelines set by Fannie Mae and Freddie Mac and stay within the conforming loan limit published each year by the Federal Housing Finance Agency (FHFA). Loans above that limit are called jumbo loans and follow each lender's own guidelines.

Plain English: conventional is the standard, non-government mortgage most people picture when they think "home loan."

Who conventional tends to fit

• Borrowers with solid credit who want mortgage insurance that can go away.
• Buyers of second homes, like a Shore house or a Florida condo, and buyers of investment properties. FHA and VA are for primary residences only.
• Buyers who've already used FHA and want to move into a different type of loan.
• First-time buyers. Fannie Mae and Freddie Mac both offer programs designed for first-time and moderate-income buyers, which I can walk you through.

Private mortgage insurance (PMI) and how it ends

If your down payment is smaller than the lender's threshold for skipping it, a conventional loan usually requires private mortgage insurance. Unlike FHA's mortgage insurance, PMI on a conventional loan isn't permanent. Under the federal Homeowners Protection Act, you can ask to cancel it once your balance reaches a set share of the home's original value, and it ends automatically a little after that, as long as you're current on payments. Rising home values and extra principal payments can sometimes get you there sooner, subject to lender rules.

Plain English: PMI on a conventional loan is temporary. We'll talk about when yours could come off.

What lenders look at

Conventional underwriting weighs your credit history, your debt-to-income ratio, your down payment and reserves, and the property. Because I'm a broker with NEXA Lending, I can compare how different lenders price and approve the same file. Small differences in guidelines can matter, especially for borrowers with multiple income sources or a recent job change.

Self-employed? Conventional loans use tax returns to document income. If your returns don't reflect what you actually earn, see bank statement loans.

Second homes at the Shore and in Florida

A lot of my New Jersey and Pennsylvania clients eventually buy a second place, whether that's a condo in Ocean City or Wildwood or a home in Florida near family. Second homes must generally be a reasonable distance from your primary home, be suitable for year-round use, and be occupied by you for part of the year rather than rented full-time. Condos also go through a project review, so I check the building early. If you plan to rent it out most of the year, it's treated as an investment property instead, and a DSCR loan may be worth comparing.

Conventional loans and upfront costs

Some down payment assistance programs, including some options through select lending partners, can be paired with conventional first mortgages. Learn more on the first-time homebuyer page.

How conventional compares

Eligible veterans should compare conventional with a VA loan, which has no monthly mortgage insurance. If your credit is still building, an FHA loan may be more flexible. Already own a home? Refinancing into a conventional loan can be a way to drop FHA mortgage insurance. See everything on the loan programs page.

Sources: FHFA conforming loan limits · CFPB: When can I remove PMI?

David J. Hutchison II, NMLS #63021 · NEXA Mortgage, LLC dba NEXA Lending, Company NMLS #1660690 · Equal Housing Opportunity