CONVENTIONAL HOME LOANS

Conventional mortgage loans are mortgages that are not insured or guaranteed by the federal government. Conventional loans boast great rates, costs, and home buying flexibility. 60% of mortgage applicants use this loan program. Conventional loans are also known as conforming loans, since they conform to a set of standards set by Fannie Mae and Freddie Mac.

Conventional loans can be fixed or at an adjusted rate. Fixed-rate mortgages have set interest rates for the entire length of the mortgage term which can be between 10 and 30 years. an adjustable-rate mortgage (ARM) has a term of 30 years with a low introductory rate for fixed period followed by periodic adjustments. Generally the conventional loan limit is $726,200.

Benefits

• Use a conventional loan to buy or refinance a primary, secondary, or rental

• Available in fixed or adjustable rates (ARMs), and offer many loan terms usually from 10 to 30 years

• Down payments as low as 3%

• No monthly mortgage insurance with a down payment of at least 20%

• Can have lower mortgage insurance rates than FHA loans

• Mortgage insurance is cancel-able when equity reaches 20%

• Buyers using conventional loans are more attractive to sellers

• Can have a non-occupant co-borrower

• May allow gift or grant for all or a portion of the down payment or closing costs

How to qualify

• 620 credit score or higher

• Down payment of 3%-20%+

• DTI below 50%

• Foreclosures: 7 year waiting period

• Short sales: 4 year waiting period

• Bankruptcy: Chapter 7- 4 year waiting period

• Bankruptcy: Chapter 13- 2 year waiting period from discharge date