If You Are Looking For A Home Loan, Using A Conventional Loan May Be A Great Place To Start.
A Conventional Mortgage refers to a loan in the more traditional sense of lending, one that falls into guidelines set by Fannie Mae and Freddie Mac.
Conventional loans generally fall into two distinct categories, depending on the loan size. Conforming loan limits refers to loans that are in line with government identified median home values for the area.
The current general loan limit for conventional loans across the US is $453,100. Non-conforming (aka High Balance Loans) are loans for higher cost areas and is currently set at $679,650. It is important to note that loan size limits vary by state and county.
Conventional loans may be either a Fixed Rate or Adjustable Rate. Fixed-rate loans have a set interest rate for the entire term of mortgage, which can be between 10 and 30 years. An adjustable-rate mortgage (ARM) has a term of 30 years with a reduced starting rate for a set period of time (typically 5 or 7 years) followed by periodic adjustments according to a specific index and margin.
A conventional loan may be the best fit for you if you are able to qualify based on income and credit requirements.
Certain version of conforming loans allow for a down payment/equity as little as 3% and/or allow for the use of only 1 year of tax returns if there are compensating factors. Not all borrowers will qualify for these features and we strongly advise that you give us a call to learn more about these features.
An important factor to be aware of, if you aren’t able to put 20% or more down, be prepared to pay mortgage insurance until such a time that your equity in the property is equal to or greater than 20%.