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NH Conventional Mortgage: Requirements, Limits & Guidelines

When you’re shopping for a new home in New Hampshire, there’s a checklist a mile long of decisions you need to make: One floor or two? Seacoast or Lakes Region? Front yard, backyard, or both? One of the bigger decisions you’ll make is what type of mortgage loan you’ll have.

You’ve probably heard of the big mortgage loan contenders: FHA (Federal Housing Authority), VA (Department of Veterans Affairs), and conventional. Both FHA and VA are furnished by specific organizations, but what counts as a conventional loan? And is it the best loan option for New Hampshire home buyers? Read on for the answers to these questions and more.

What is a Conventional Mortgage Loan?

A conventional mortgage is a private-sector loan that isn’t backed by the government (unlike FHA or VA loans) and that follows the guidelines set by Fannie Mae and Freddie Mac. These two lending entities were created by Congress in order to “provide liquidity, stability and affordability to the mortgage market.”

Conventional mortgages are the most common type of loan and account for 60% of all mortgage applications. This is likely due to the fact that private mortgage insurance (PMI) is less expensive for a conventional loan than for a government-backed loan. Conventional mortgages are also available for almost any property type; FHA and VA loans, on the other hand, come with some property restrictions.

There are two types of conventional loans: conforming loans and non-conforming loans. A conforming loan refers to any conventional mortgage that adheres to the financing limits set by the Federal Housing Finance Agency (FHFA). According to Find My Way Home, the 2021 maximum conforming loan limit for single-family homes in most of New Hampshire is $548,250 (the limit tops out at $724,500 in Rockingham and Strafford Counties).

As their name implies, non-conforming loans — also known as jumbo loans — exceed the FHFA’s conventional mortgage financing limits. Non-conforming loans typically have higher interest rates and higher down payments than conforming loans.

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FHA vs. Conventional Mortgage: Which Is Better In NH?

The type of loan you choose depends on the conditions you can meet to qualify. Conventional mortgage loan applicants typically need a good credit score (at least 620) and the ability to put down at least 5% of the housing cost up front. Conventional loans come with flexible PMI programs for borrowers who put less than 20% down.

While an FHA or VA loan allows borrowers to put as little as 0%–3% down, -government-backed loans generally have lower limits than a conventional loan. For example, the national loan cap for an FHA loan is $356,362 — roughly $200,000 less than the standard conventional loan limit in New Hampshire. Plus, there are some conventional loan options that can compete with lower down payment thresholds (see this table below).

Conventional mortgage loans don’t have owner occupancy requirements, meaning that they can be attractive to a buyer looking to build their real estate portfolio with investment properties. Government-backed loans often require owners to live onsite for a period of time if they purchase a multifamily property.
New Hampshire Housing offers cash assistance to conventional borrowers as part of their Home Preferred Plus program. This assistance comes in the form of a second mortgage and provides up to 4% of the base loan amount to help offset down payments and closing costs. The entire amount is forgiven within four years if the buyer remains in the house and does not refinance or file for bankruptcy.

Home Preferred Plus serves conventional borrowers who earn up to 80% of their area’s median income (AMI), while Home Preferred Plus Over 80% AMI caps borrowers’ income at $135,000. All eligible home buyers must complete a homeowner education course to qualify.

If you’re on the fence about which loan type is right for your situation, this chart will help you see how conventional mortgages stack up to the competition:

Conventional FHA VA USDA
Backed By Fannie Mae or Freddie Mac U.S. Federal Housing Administration U.S. Department of Veteran Affairs U.S. Department of Agriculture
Min. Credit Score 620–640 (depending on the lender) 500–580 (depending on the lender) No minimum credit score requirement No minimum credit score requirement
Max DTI 35% (though some lenders accept 43%) 45%–50% (depending on the lender) 41% 41%
Min. Down Payment 5% (though 3% down options are available) As low as 3.5% down $0 down payment $0 down payment
Eligible Property Types Any property type, including second homes and investment properties Primary residences only; property must be owner occupied Primary residences only; property must be owner occupied Primary residences only; property must be owner occupied
PMI No PMI for borrowers who put 20% down; between 0.5% and 1% for all other borrowers PMI comes with an upfront premium of 1.75% of the loan amount; between 0.45% and 1.05% for the remainder No PMI No PMI
Other Notes Borrowers can apply for either a conforming or non-conforming loan Borrowers can also apply for an FHA 203(k) renovation loan Available only to active-duty veterans w/ 90+ days of service during wartime or those who served 181 days continuous active duty during peacetime Only low- to-moderate income buyers in rural USDA-approved areas are eligible

Types of Conventional Loans in NH

There are many conventional mortgage loan options available in the Granite State that require far less than 20% down up front. In fact, though 5% down is the standard rate, there are several conventional mortgage loans that require as little as 3%, such as Conventional 97 and Home Possible Advantage. Take a look at this table to explore your options:

Loan Type Requirements
5% down with PMI (Conventional 95) One loan at 95% loan-to-value ratio. PMI required.
Conventional 97 3% down. No income limits.
HomeReady® 3% down. Applicants must be at or below the geographical area’s median income, unless home is located in an underserved area.
90% loan One loan with 10% down. PMI required.
Piggyback 80/10/10 10% down, 10% second mortgage, and 80% conventional loan. No PMI required.
Home Possible Advantage 3% down loan with income restrictions. Offered by Freddie Mac home lenders.
Down Payment Gift Applicants may receive any percentage of the down payment as a gift from family or other eligible source.

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Requirements for Conventional Mortgage in NH

As with any type of home loan, there are certain requirements a borrower must meet in order to qualify for a conventional mortgage in New Hampshire:

  • Credit Score: As mentioned above, the minimum credit score to qualify for a conventional mortgage ranges from 620 to 640, depending on the lender.
  • Documentation: Borrowers applying for a conventional mortgage will need to provide documentation detailing their income and assets, amongst other things. This documentation typically includes:
    • Two years’ worth of employment information
    • A list of assets and liabilities
    • Government-issued identification
    • Two years’ worth of W-2s
    • 30 days’ worth of pay stubs
    • Two to three years’ worth of income tax returns
    • IRS Form 4506-T (signed and dated)
    • Two to three months’ worth of bank statements
    • Two to three months’ worth of investment account statements
    • Gift letter (if using gift funds)
    • Credit report
    • Bankruptcy/discharge papers for any documented bankruptcies
    • Renting history

Borrowers who are self-employed are required to present additional documentation, including proof of income, a current profit and loss statement and a list of all business debts.

  • Income & Assets: Lenders will use the documentation list above (specifically bank and investment account statements) to verify that the borrower has sufficient means to cover both the down payment and associated closing costs.
  • Minimum Down Payment: Typically, conventional mortgage loans require a higher down payment than government-backed loans, with most lenders requiring at least 5% down. However, there are a few conventional loan options that allow for 3% down (see table above).
  • Property Type Eligibility: One of the many benefits to applying for a conventional mortgage is that it can be used for almost any type of property, including single-family homes, multi-unit properties and rehab properties. Unlike government-backed loans, conventional loans do not have any owner occupancy requirements, which makes them an excellent option for second homes or investment properties.
  • Debt-to-Income Ratio: Most conventional mortgage lenders will allow for a maximum DTI of 43%.
  • Private Mortgage Insurance: Any borrower who applies for a conventional mortgage and pays less than 20% down on their home is required to pay PMI. PMI for a conventional loan generally costs between 0.5% and 1% of the entire loan on an annual basis, though this varies depending on the borrower’s credit rating.

Conventional Loans in NH: Pros & Cons

Deciding what mortgage loan option will work for you is no small task. To recap, here are the pros and cons of conventional loans in New Hampshire for your consideration:

 

Pros Cons
With a conventional loan, borrowers have a choice of 15, 20, 25 or 30-year mortgage terms. Conventional loans have a higher minimum credit score requirement than government-backed loans.
Conventional mortgages are available as fixed-rate or adjustable rate mortgages. Conventional loans require a higher down payment than government-backed loans.
Borrowers can apply conventional loans to almost any type of property. Conventional mortgages are typically harder to qualify for.
Depending on the type of conventional mortgage, borrowers could pay as little as 3% down. Conventional mortgages come with strict income guidelines.
Conventional loan borrowers are eligible to borrow more than other loan types. Conventional loans have slightly higher rates than government-backed loans.
Borrowers can avoid PMI by putting 20% down, or even cancel their PMI. Borrowers must have reserve money left over in the bank after their down payment.

Have Any Questions?

Armed with the info you just read, you’re ready to start exploring your conventional loan options in New Hampshire.

Have any questions that you don’t see answered here? Blue Water Mortgage can help. Our team of licensed loan officers boasts over 150 years of collective credit-based mortgage experience — so you could say we’ve dealt with our fair share of conventional mortgages and the questions that come with them.

Feel free to contact us with any inquiries you might have about conventional loans or any other loan type, and we can start your journey to homeownership together.

Roger is an owner and licensed Loan Officer at the Blue Water Mortgage office in Hampton, NH. Roger graduated from the University of New Hampshire Whittemore School of Business and has been in the mortgage industry for over 20 years. Roger has originated over 2500 residential loans and is licensed in New Hampshire, Massachusetts, Maine, Connecticut and Florida.

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