Conventional Loans
What Are Conventional Loans?
Conventional Loans are home loans that are not backed by a government agency like FHA, VA, or USDA. Instead, they typically follow the lending guidelines established by Fannie Mae and Freddie Mac. These loans often offer competitive interest rates, flexible terms, and lower fees compared to government-backed options—but they generally require stronger borrower qualifications.
Conventional loans are a great fit for buyers in Richmond who have:
- Good to excellent credit
- Stable monthly income
- Manageable debt levels
- A down payment of at least 5–20%
Most Common Types of Conventional Loans
These loans offer a consistent monthly payment and interest rate throughout the life of the loan.
One
30-Year Fixed Loan Lowest fixed monthly payments
Two
20-Year Fixed Loan Lower fixed monthly payments than a 30-year term
Three
15-Year Fixed Loan Lower rate than 30- or 20-year terms; save on interest and pay off your loan faster
Four
10-Year Fixed Loan Even lower rates; faster equity building and payoff
Five
5-Year Fixed Loan Lowest rate; rapid equity growth and fastest loan payoff
Adjustable Rate Mortgages (ARMs)
ARMs offer a fixed rate for an initial period, then adjust annually based on market conditions.
- 3/1 ARM
Fixed for 3 years, then adjusts annually for the remaining 27 years
- 5/1 ARM
Fixed for 5 years, then adjusts annually for the next 25 years
- 7/1 ARM
Fixed for 7 years, then adjusts annually for the final 23 years
Conventional Loan Down Payment Requirements
To qualify for a conventional loan in Richmond, borrowers typically need to meet the following criteria:
- Purchasing a Home:
A down payment of 5% to 20% of the purchase price is typically required.
- Refinancing a Home:
Most lenders require at least 10% equity in the property.
