Conventional Loan
What is a conventional loan?
A mortgage conforming to Fannie Mae or Freddie Mac guidelines — the standard loan type for primary residences and small investor portfolios.
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.