Conventional Loan Fresno, CA

What is a Conventional Loan?

A conventional home loan is a mortgage that does not have government backing or insurance. These loans follow the regulations established by Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation), two influential entities that help shape the housing market in the United States.

Types of Conventional Loans

1. Conforming Loans: These mortgages comply with the criteria established by Fannie Mae and Freddie Mac, including specific loan amount restrictions. In 2025, the highest allowable conforming loan amount for a single-family residence in Fresno County is $806,500.
2. Non-Conforming Loans (Jumbo Loans): Mortgages that surpass the conforming loan limits are classified as non-conforming or jumbo loans.

Benefits of Choosing a Conventional Loan in Fresno, CA

Choosing a conventional mortgage in Fresno comes with several benefits:

• Attractive Interest Rates: Borrowers with excellent credit scores often qualify for lower rates, helping to reduce monthly mortgage costs.
• Flexible Down Payment Options: While a 20% down payment removes the requirement for Private Mortgage Insurance (PMI), qualified first-time homebuyers can obtain a loan with as little as 3% down.
• Versatile Property Eligibility: Conventional loans can be used to finance different types of properties, including primary homes, vacation houses, and rental units.

• PMI Cancellation: Unlike some government-backed loans, PMI on conventional loans can be canceled once you achieve 20% equity in your home, potentially reducing your monthly payment over time.

Eligibility Criteria for Conventional Loans in Fresno, CA (2025)

To secure a conventional mortgage in Fresno, CA, applicants must satisfy certain requirements:

1. Credit Score

A minimum credit score of 620 is typically required for approval.

• Higher credit scores can enhance your chances of approval and may grant access to more favorable interest rates.

2. Down Payment

• New Homebuyers: Could be eligible for down payments as low as 3% through initiatives such as Fannie Mae’s HomeReady® or Freddie Mac’s Home Possible®.
• Standard Borrowers: Generally, a minimum of 5% down is required. Down Payment and PMI
  Providing a down payment of at least 20% eliminates the need for Private Mortgage Insurance (PMI).

3. Debt-to-Income (DTI) Ratio

• Most lenders expect applicants to keep their DTI ratio at or below 43%, helping ensure that monthly debt payments stay within a reasonable portion of their income.
• Some lenders may allow up to 49%, depending on other qualifying factors.

4. Employment and Income Verification

• A stable employment history, typically spanning at least two years, is essential.
• Applicants must provide verified proof of stable income, typically through documents like pay stubs, tax returns, and bank statements.

5. Property Requirements

• The property must meet specific standards and undergo an appraisal to confirm its value aligns with the loan amount.

Loan Limits in Fresno County

For 2025, the Federal Housing Finance Agency (FHFA) set the maximum conforming loan limit for a single-family home in Fresno County at $806,500.

This limit determines the maximum loan amount for conventional conforming loans in the area. Loans that surpass this limit are classified as jumbo loans and typically come with distinct eligibility criteria.