Conventional Loans

Conventional Loans – Everything You Need To Know

Conventional Loans

• First time homebuyers
• Minimum 620 credit score
• Much higher loan limits
• Minimum 3% down payment
• No mortgage insurance below 80% LTV

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Get the financing you need to buy your dream home with a Conventional Loan from Fannie Mae and Freddie Mac. You can get the perfect mortgage for your needs with competitive rates, flexible terms, and low-down payment options. Plus, with our easy application process and fast approvals, getting the financing you need to purchase your home has never been easier. Don’t wait any longer – get started with your Conventional Loan today!

It’s important to note that conventional loans adhere to the guidelines of Fannie Mae and Freddie Mac, making them the primary source of funding for mortgage lenders. However, they do not provide mortgages to borrowers directly, rather they purchase and guarantee them in the secondary mortgage market. To qualify for a conventional loan, there are several different types of programs available that have different requirements when it comes to down payment, credit score, property type and loan-to-value ratios.

Conventional Loans

For example, Fannie Mae and Freddie Mac both offer programs that are specifically designed for first-time home buyers with low down payments. Their Home Ready program requires just a 3% down payment, however the borrower’s income must not exceed 100% of the annual HUD Area Median Income for the subject property’s location. Similarly, their Home Possible program also requires a 3% down payment with a minimum 620 credit score and certain income limits may apply. Additionally, their HomeStyle Renovation loan allows home buyers to purchase a property and include the cost of certain home improvements as part of their mortgage loan. Lastly, Conforming High Balance mortgages are available in designated high-cost areas with higher maximum loan limits than usual. This year’s limit has already been set at $726,200.00 — an 12.21% increase over the 2022 limit.

To use any of these services provided by Fannie Mae and Freddie Mac you must have at least a 620-credit score. Their mission is to help ensure that all home buyers have access to proper mortgage financing solutions so they can own a home.

Conventional loans

There are several types of conventional loan programs that you may qualify for. Each program has different down payment, credit score, property type and loan-to-value requirements.

Fannie Mae and Freddie Mac have several programs for first time home buyers with a low down payment.

• Home Ready program requires a minimum down payment of 3%. The borrower’s income cannot exceed 100% of the annual HUD Area Median Income for the subject property’s location.
• Home Possible program requires a minimum down payment of 3%. First Time Home Buyers must have a minimum 620 credit score. The program does have income limits.
• HomeStyle Renovation loan allows a home buyer to purchase a property and roll the cost of certain home improvements directly into the mortgage loan.
• Conforming High Balance are mortgages originated using higher maximum loan limits that are permitted in designated high-cost areas.
• Conforming loan limits will rise from this year’s total of $541,400 to $548,250 for 2021.

Fannie Mae and Freddie Mac require a minimum credit score of 620 to buy a home. Their mission is to help ensure that home buyers and home owners have access to mortgage financing.

Conventional Loans

As a result Agency Conventional Loans are loans that conform to the guidelines of the Government Sponsored Entities known as Fannie Mae and Freddie Mac. The eligible amount of financing for any loan is determined by factors specific to that Loan, including, but not limited to the following:

• Type of financing
• Loan-to-Value (LTV) ratio
• Loan amount
• Property type
• Income determination

Above all the greatest advantage of a conventional loan is that once your loan-to-value is at or below 80% mortgage insurance is not required.

Finally to begin the process of buying a home apply online or call us.

Learn more about mortgage loans.