Mortgage Glossary
Conventional Loan
A mortgage conforming to Fannie Mae or Freddie Mac guidelines — the standard loan type for primary residences and small investor portfolios.
What is a conventional loan?
A conventional loan is a mortgage that meets Fannie Mae or Freddie Mac (the government-sponsored entities, or GSEs) underwriting guidelines. These are private mortgages — not government-insured like FHA or VA — but they conform to GSE rules so the GSEs can purchase them on the secondary market. That secondary-market demand is what keeps conventional rates relatively low.
Conventional underwriting requires standard documentation: tax returns, W-2s, paystubs, debt-to-income (DTI) calculations, asset statements, and a credit pull. The borrower must qualify based on personal income, with DTI typically capped at 45–50% depending on FICO and other compensating factors.
Conventional loans can finance primary residences, second homes, and investment property — but each borrower is capped at 10 total financed 1–4 unit properties, including the primary residence. This limit becomes a ceiling for serious real estate investors.
Not offered by TQL — here’s how TQL programs compare
Total Quality Lending does not originate conventional loans. TQL is a non-QM specialty lender. We focus on borrowers and properties that don’t fit the conventional box:
- Real estate investors using property cash flow to qualify — DSCR loans instead of personal-income underwriting
- Self-employed and 1099 borrowers using alt-doc paths — Prime Time with bank statement, P&L, asset utilization, or written VOE
- Investors past the 10-property conventional cap
- Properties conventional won’t finance: non-warrantable condos, condotels, mixed-use, 5–8 unit, foreign-national borrowers, ITIN holders
- LLC and entity vesting (Fannie/Freddie require individual borrowers)
The typical investor journey: start with conventional financing, hit the 10-property cap, then refinance and grow with TQL DSCR.
FAQs
Does TQL offer conventional loans?
No. Total Quality Lending is a non-QM specialty lender. We don't originate conventional Fannie Mae or Freddie Mac loans. Our products serve borrowers and properties that don't fit the conventional box — investors, self-employed, foreign nationals, ITIN holders, non-warrantable condos, and properties beyond the 10-financed-property cap.
What's the conventional 10-property limit?
Fannie Mae and Freddie Mac cap each borrower at 10 total financed 1–4 unit properties (including the primary residence). Investors who hit this cap can't add more conventional mortgages — but TQL DSCR has no such limit, since the underwriting is on the property's cash flow rather than the borrower's total debt position.
When should I use conventional vs TQL DSCR?
Conventional is usually the cheapest path if you qualify — W-2 income, low DTI, under the property cap, primary residence or up to 10 investment properties. TQL DSCR is the better path when you don't have W-2 income, are self-employed with hard-to-document earnings, own properties in an LLC, are at the 10-property cap, or are buying a non-warrantable condo / condotel that conventional won't touch.
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