Conventional Mortgage

Conventional mortgages are the basic finance product that Mass. home buyers have been utilizing for decades to secure the home of their dreams. Conventional loans are mortgages that are backed by Fannie Mae or Freddie Mac, and therefore require adherence to the national underwriting standards set by Fannie & Freddie. What is nice about conventional loans versus some of the other government insured products like FHA & VA, is that conventional mortgages do have flexibility in their loan repayment terms. They come in a variety of term lengths and have various fixed and adjustable periods depending on the borrower’s specific needs. With the diversity in loan products however, come tighter underwriting standards.


  • Wider variety of mortgage terms – 10, 15, 20, 25, 30 years
  • Wider variety of interest rate options – Fixed, 3/1, 5/1, 7/1 ARM’s,
  • Lower monthly mortgage insurance rates than FHA loans
  • Higher Loan Limits
  • Mortgage insurance can be rolled into the rate to avoid additional monthly payments
  • Can be utilized for 2nd homes and investment properties
  • Easier appraisal standards
  • Can have multiple conventional loans at one time


  • Tighter underwriting guidelines
  • Less flexibility with DTI (debt to income ratio) – 45% max
  • Less flexibility with gifting of down payment
  • Higher credit score requirements
  • Higher down payment requirements
  • Mortgage Insurance still required with less than 20% down

Conventional Loan Options

What makes the conventional mortgage a popular option for MA home buyers is the range of options. A conventional loan can be either a conforming or non-conforming product depending on how it fits into Fannie or Freddie’s underwriting guidelines or loan limits.

Fixed:The payment is fixed for the duration of the loan

ARM:Adjustable Rate Mortgage can be fixed for a variety of time periods before it may adjustable. Some of the more popular products are the 3/1 ARM, 5/1 ARM, & the 7/1 ARM. The first number is the length of time it is fixed for. So, a 5/1 ARM has an interest rate that is fixed for the first 5 years.  The 1 is the amount of times the loan can adjust in a year once it moves to it’s adjustable period.

Interest Only: An “I.O.” loan as its commonly referred to, requires that the home owner only pay the interest portion on the loan every month. The actual loan balance doesn’t decrease, like a fully amortized loan. So, if you make an “I.O.” payment for 5 year without adding any additional amount to the principal, you will owe the same amount as when you initially obtained the mortgage. This loan isn’t recommended for most people but can be beneficial to investors, or someone who gets paid in lump sums and is disciplined with their finances.

Mass. Mortgage Buddy Tip: Discuss openly your short and long term housing goals with your lender. For most people it is recommended to go with the security of a fixed mortgage but there are circumstances in which another loan product may be a better fit.

Conventional Loan Limits

The Federal Housing Finance Agency (“FHFA”) sets the national maximum loan limits for the conventional loans that are backed by Fannie Mae & Freddie Mac. The loan limits are based on the amount of risk Fannie & Freddie want to take based on the average home value in the United States.

The conventional loan limits in MA are broken down by county just like they are for FHA. Generally, the limit is $417,000, but for 2013, some areas have been categorized as “high cost” areas and Fannie & Freddie will allow higher loan limits.

Massachusetts Counties 1 UNIT 2 UNITS 3 UNITS 4 UNITS
Barnstable County $417,000 $533,850 $645,300 $801,950
Berkshire County $417,000 $533,850 $645,300 $801,950
Bristol County $426,650 $546,200 $660,200 $820,500
Dukes County $625,500 $800,775 $967,950 $1,202,925
Essex County $465,750 $596,250 $720,700 $895,700
Franklin County $417,000 $533,850 $645,300 $801,950
Hampden County $417,000 $533,850 $645,300 $801,950
Hampshire County $417,000 $533,850 $645,300 $801,950
Middlesex County $465,750 $596,250 $720,700 $895,700
Nantucket County $625,500 $800,775 $967,950 $1,202,925
Norfolk County $465,750 $596,250 $720,700 $895,700
Plymouth County $465,750 $596,250 $720,700 $895,700
Suffolk County $465,750 $596,250 $720,700 $895,700
Worcester County $417,000 $533,850 $645,300 $801,950

For limits in other states see Fannie & Freddie Conventional loan limits.

Conventional Tips & Traps


  • Accuracy matters – make sure to provide your lender with a complete financial picture & all of information requested
  • Inform your lender of any changes to your credit including credit inquiries, new accounts opened, or recent late payments
  • Always provide full bank or retirement statements that include your name/address/institution/full account#/all pages. If it says page 1 of 5, all 5 pages will be required.
  • Provide documentation after an approval is issued as quickly as possible
  • If utilizing gift funds talk with your lender about the required documentation and how to structure the transaction


  • Do not deposit any money into your bank account (other than payroll checks) until first talking with your loan officer; Don’t ever deposit cash into your account during the mortgage process
  • Do not open up any new lines of credit or pull your credit until you have closed on your loan
  • Do not change your financial picture during the transaction – job change, payment history, etc.
  • Work with your lender, not against them. Sometimes it may seem like the lender is asking for too much paperwork, or irrelevant paperwork. The lender is just following strict guidelines. They are not picking on you. Try to be thorough, organized and review all of your documentation before sending it over to make sure it is complete.

Remember:Your lender is your best friend during this process. Be patient and work with them. The road to home ownership requires team work between buyer, lender, attorney & real estate agent.