A conventional loan, often referred to as an A-paper or bank loan, is the most common type of mortgage. These loans are not government-insured and are typically used by borrowers with solid credit, stable income, and documented assets. Many buyers choose conventional loans because they offer competitive interest rates and flexible term options.

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What is an A-paper (conventional) loan?

A-paper loans are mortgages offered by banks, credit unions, and mortgage lenders and are sold to Fannie Mae or Freddie Mac. Because these loans are not backed by the government, they follow standard underwriting guidelines related to credit, income, and assets.

Borrowers may be able to purchase a home with as little as 5% down, depending on the program and credit profile. Higher down payments can reduce monthly payments and eliminate mortgage insurance.

If the down payment is less than 20%, private mortgage insurance (PMI) is required. PMI protects the lender and is added to the monthly payment but can typically be removed once the loan balance reaches 80% of the home’s value.

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What is required for an A-paper (conventional) loan?

Borrowers will need to provide documentation to verify their financial profile, including employment and income history, assets, credit, and overall debt-to-income ratio. An appraisal is required to confirm the value of the property.

Credit requirements are generally higher than FHA loans, but conventional loans offer more flexibility for second homes and investment properties. Each application is reviewed individually, and additional documentation or explanations may be requested during underwriting.

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How A-paper Loans Work

• Down payments typically range from 5% to 20%

• Fixed-rate terms available in 30-, 25-, 20-, and 15-year options

• Adjustable-rate mortgages may be available

• PMI required with less than 20% down and removable over time

• No pre-payment penalties

Have questions? Give us a call. One of our mortgage specialists would be happy to help you understand your options.