Conventional Loans
Home Purchase: Can be used for primary residences, second homes, and investment properties
Refinancing: Can be used to refinance an existing mortgage.
Key Features
- Down Payment: As low as 5%; or 3% for some first-time homebuyers
- Loan Term: 10, 15, 20, 25 & 30 years.
- Interest Rates: Can be fixed or variable.
- Credit Score: Usually requires a credit score of 620 or higher.
Benefits
- Flexibility: Various term lengths and interest rate options.
- No Mortgage Insurance: If down payment is 20% or more.
- Lower Overall Costs: Potentially lower costs over the life of the loan if you have a strong credit profile.
- Home Equity: You can build equity more quickly with a conventional loan.
Considerations
- Credit Requirements: Higher credit score generally needed compared to government-backed loans.
- Down Payment: A significant down payment could be required, especially for those with lower credit scores.
- Private Mortgage Insurance (PMI): Required if down payment is less than 20%.
- Loan Limits: Some conventional loans have maximum borrowing limits, though they are generally higher than government-backed loans.
Eligibility
- Residency: U.S. citizens, Permanent Residents, and some non-permanent residents eligible.
- Income: Proof of stable income typically required.
- Debt-to-Income Ratio: Usually should be under 43%.
Application Process
- Documentation: Proof of income, employment, and credit history usually required.
- Appraisal: An appraisal will generally be needed to determine the home’s value.
- Closing: Final approval, often 30-45 days from application to closing.
Always consult with your loan officer to make sure you’re making the best decision for your specific circumstances.
