NBT Home Loans <br/> A Division of NBT Realty Serv
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Conventional Loans

A conventional loan differs from FHA, VA and USDA. It is insured by the government and often offers smaller or no down payment options geared towards more affordable areas and first-time buyers or those with previous credit problems. For eligible Veterans, VA loans may have both lower (or zero) down payment options, lower rates and better terms.

For borrowers with good credit, steady income and slightly larger down payments, conventional loans often have more flexible terms and interest rates and are often better choices for higher priced homes.

  • Conventional loans offer several advantages. First, they often have more flexible terms and lower interest rates than government-backed loans. Additionally, conventional loans also allow for higher loan amounts, making them suitable for financing higher-priced homes.

  • Some borrowers are eligible for home loans with as little as 3% to 5% cash down. While lower down payments may have additional costs such as private mortgage insurance, for some, this may be the best choice. Call and we’ll help you understand the differences so you can decide what’s best for you at this time.

  • Most conventional loans require a (reasonably) good credit score, stable employment history, and a manageable debt-to-income ratio. Other factors, such as your income, assets, and the property's appraisal value, will also be considered. Specific requirements may vary, so it's essential to consult with a mortgage professional to determine your eligibility.

  • Conventional loans can be an excellent choice for many homebuyers. They often offer competitive interest rates, term flexibility, and the ability to finance various property types. However, whether a conventional loan is the best option depends on your financial situation, credit history, and preferences. It's always a good idea to explore multiple loan options and consult a mortgage professional to determine the best fit for your needs and preferences. Call us to compare multiple loan options and to help choose the one that’s best for your current needs and goals.

  • The best time to refinance an FHA loan into a conventional loan depends on several factors. In most cases, you can refinance an FHA loan into a conventional loan once you have built enough equity in your home. Typically, this means reaching an 80% loan-to-value (LTV) ratio based either on the original loan terms or the higher current market value of the property. Since specific requirements vary, call us and we’ll discuss your options and guide you through the process.


There are several options available to help cover closing costs with your conventional loan:

  • Depending on market conditions, you may be able to ask the seller for "seller concessions". You can negotiate this into your contract when buying the home. Let your real estate agent and mortgage professional know if you plan to ask for seller concessions.
  • Chose a higher interest rate that allows the lender to help cover your closing costs. 
  • Some  loan programs allow money for a down payment and closing costs to be a gift from relatives, employers or close friends. Since these programs have very specific requirements, it’s best to talk about them early in your pre-qualification or pre-approval process so we can help make sure everything is done correctly.

  • It is possible to obtain a conventional loan if you owe taxes, but it depends on several factors. First, it's important to understand the difference between owing taxes and having a tax lien. Owing taxes means you owe money to the IRS and/or a state, while a tax lien occurs when your unpaid taxes result in collection actions. Having an IRS lien on your income or assets can significantly decrease your chances of being approved for a conventional mortgage.
  • Communicate openly with your mortgage professional to guide you through the loan application process and help you explore potential solutions or alternatives.

  • Higher Loan Limits: Conventional loans generally offer higher loan limits compared to FHA loans. This can be beneficial if you are looking to finance a more expensive property or live in a high-cost area, as it allows you to borrow a larger amount.
  • No Upfront Mortgage Insurance: Unlike FHA loans, Conventional loans do not require upfront mortgage insurance premiums. This means you can save on the upfront costs associated with the loan and potentially lower your overall loan amount.
  • - Flexible Mortgage Insurance Options: With a Conventional loan, once you reach a loan-to-value (LTV) ratio of 80% or less, you have the option to cancel private mortgage insurance (PMI) or request its removal. This can result in significant savings over time compared to FHA loans, which typically require mortgage insurance for the entire loan term.
  • - More Lenient Property Standards: Conventional loans generally have more flexibility when it comes to property condition and appraisal requirements. FHA loans often have stricter property standards, which could limit your options when purchasing a home that needs repairs or renovations.
  • It's important to note that both loan types have their own advantages and considerations, and the right choice depends on your specific financial situation and goals. Consulting with a mortgage professional can help you evaluate the options and determine the best fit for your needs.