CONVENTIONAL & HOME POSSIBLE
Is a conventional loan better than FHA for Alaska buyers?
For buyers with solid credit and some savings, conventional loans — including Freddie Mac's Home Possible — often beat FHA on total cost.
What is a conventional loan?
A conventional loan is a mortgage not backed by a government agency (unlike FHA, VA, or USDA). It follows guidelines set by Fannie Mae or Freddie Mac. Conventional loans typically require stronger credit and a larger down payment than government-backed loans, but they often have lower total costs for buyers who qualify.
What is Freddie Mac Home Possible?
Home Possible is a Freddie Mac conventional loan program designed for low-to-moderate income buyers. It allows down payments as low as 3% and has reduced mortgage insurance compared to FHA. Income limits apply — but in Alaska, those limits are generous. It's one of the best programs available for buyers who don't qualify for VA or USDA.
How much do I need to put down on a conventional loan?
As little as 3% with Home Possible (income limits apply). Standard conventional loans typically require 5% down. Put 20% down and you avoid PMI entirely. The more you put down, the better your rate and the lower your monthly payment.
Do conventional loans require mortgage insurance?
Only if you put less than 20% down. Conventional PMI is typically cheaper than FHA mortgage insurance — and unlike FHA, it automatically cancels when you reach 20% equity. This makes conventional loans more cost-effective over time for buyers who start with less than 20% down.
Conventional vs. FHA — which is better for Alaska buyers?
It depends on your credit score and down payment. With a 620+ credit score and 5%+ down, conventional is usually cheaper over the life of the loan because PMI cancels. With a lower credit score or minimal savings, FHA may be the only option. I'll run both scenarios for your situation so you can compare real numbers.
Are there conventional loan limits in Alaska?
Yes — conforming loan limits set by the FHFA. Alaska is a high-cost state, so limits are higher than the national baseline. For 2024, the conforming limit in most Alaska counties is $1,149,825 for a single-family home. Loans above this are jumbo loans with different requirements.