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What are Conventional Mortgage Home Loans?
Conventional loans also known as Conforming Mortgage Loans are mortgage loans that meet the credit and income guidelines of the government sponsored enterprises of Fannie Mae and Freddie Mac.
Conventional mortgages are not government backed loans like FHA loan programs, VA Loans and USDA Loans. These loans are provided from private lenders.
Conventional loan rates are generally lower due to the higher credit score requirements and minimum down payment to purchase or refinance a home as compared to FHA loans.
Due to the low interest rates offered under Conventional mortgages, borrowers can expect to see lower monthly mortgage payments compared to other higher interest rate loans.
Under Fannie Mae & Freddie Mac conforming conventional loan requirements a borrower will be required to purchase private mortgage insurance when the new loan amount is more than 80% of the value of the home.
The private mortgage insurance policy will protect the mortgage lender from potential losses in the event of a mortgage default.
There are a variety of Conventional Loan types to match the intentions of every borrower's request.
These conventional loans offer borrowers the ability to purchase a home, refinance to a lower monthly payment, refinance to get equity out of the home, and home improvement mortgage loans.
Conventional loans offer some of the lowest interest rates in the marketplace. All conventional loans give borrowers the ability to have an adjustable-rate mortgage loan or fixed rate mortgage loans with terms of 10, 15, 20, 25, and 30 year term mortgage loans.
Conventional Mortgage Home Loans Requirements Summary:
loan repayment period of 30, 25, 20, 15 and 10 Year Fixed rate loan and Adjustable-Rate LOANs
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* Primary, 2nd Home, or Investment
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* Single, Condo, Manufactured, Multi-family
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* 5% Down Payment
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* 3% Down Payment for Home Possible and Home Ready
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* Mortgage Insurance Options
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* Lower Rate & Better Terms
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* 620 Minimum Credit Score
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* Debt-to-Income ratio less than 50%
Conventional Mortgage Home Loan Programs
EquiFund Mortgage offers a wide selection of mortgage loan programs. The most common loan program is a Conventional mortgage that offer borrowers mortgage financing for all types of loan request.
These programs are ideal for purchasing a home or refinancing an existing property to lower monthly payments, lower interest rates or access the equity in home with a cash out conventional loan refinance.
Conventional loans also include home improvement loans to make improvements to any home you are purchasing or refinancing.
Conventional Loans, also known as conforming loans, adhere to the underwriting guidelines authored by Fannie Mae and Freddie Mac government sponsored enterprises. Most mortgage lenders and banks follow these underwriting guidelines to ensure that the loans are marketable and can be sold to other investors.
A Conventional loan requires private mortgage insurance when the loan amount exceeds 80% of the value of the property. The private monthly mortgage insurance is added to the monthly mortgage payment and insures the mortgage lender or bank from losses on a loan that exceeds 80% loan-to-value.
Conventional Loan to Purchase Home
Conventional purchase loans offer homebuyers the ability to purchase a home with as little as 5% of the purchase price for a down payment. To qualify under Fannie Mae or Freddie Mac guidelines, borrowers must have a min. credit score of 620 and 2 years of employment income, unless previously retired or in college.
Benefits of Conventional Loans:
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Lower Interest Rates for higher credit scores
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3-5% Down-Payment Requirements
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No funding fees
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Easy qualifications and loan approvals
Conventional Refinance to Lower Payment
Existing homeowners are offered the ability to lower their monthly mortgage payment by using a Conventional Loan Rate and Term Refinance that can lower the existing interest rate or refinancing the current loan balance back to a full 30-year term. This will help homeowners who are looking for every option to lower their monthly bills.
Benefits of Conventional Loans:
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Borrow up to 95% value of home
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Refinance to a lower interest rate
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No mortgage insurance when LTV is less than 80%
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Easy qualifications and loan approvals
Conventional Loan for Cash Out Refinance
This is a great program for homeowner in need of cash for investments, to purchase another property, pay for college, home improvements or personal matters. A Conventional loan cash-out mortgage loan grants homeowners the ability to access the equity in their home at an interest rate far lower than personal loans and credit card debts.
Benefits of Conventional Loans:
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Lower Interest Rates for higher credit scores
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No monthly mortgage insurance
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Borrow up to 80% the value of the home
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Easy qualifications and loan approvals
Conventional Loan for Debt Consolidation
A Conventional debt consolidation mortgage loan gives homeowners the ability to consolidate their high interest rate debts like credit cards, auto loans, and personal loans into one monthly payment. In many cases, the monthly savings realized by consolidating the debt affords homeowners the ability to pay their home off up to 40% faster.
Benefits of Conventional Loans:
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Lower Interest Rates for higher credit scores
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Borrow up to 80% the value of home
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No monthly mortgage insurance
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Easy qualifications and loan approvals
Conventional Loans HomeReady and HomePossible
HomeReady from Fannie Mae, and HomePossible from Freddie Mac offer borrowers who have a gross annual income less than or equal to 80% of the median area income. These loan programs provide lower down payments of 3% on purchase and lower interest rates and monthly mortgage insurance compared to the standard conventional mortgage loan.
Benefits of Conventional Loans:
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3% down payment on purchase
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Lower monthly mortgage insurance
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Must qualify with median income cap
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Easy qualifications and loan approvals
Conventional Loans for Home Improvement
The Fannie Mae HomeStyle, HomeStyle Energy Loan and Freedie Mac CHOICE Renovation loan programs gives homebuyers and existing homeowners the ability to finance the cost of the home but also the additional home improvement and remodeling cost into one mortgage. These programs are available for both buying a home or refinancing an existing residential property.
Benefits of Conventional Loans:
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After Value Real Estate Appraisals
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Borrow up to 95% of after value appraisal
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Lower interest rates Home Improvement loans
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Easy qualifications and loan approvals
Conventional Conforming Loan Limit (2023)
As of April, 2023 the max loan amount allowed for a standard area Conventional Conforming Loan limits for a One-Unit Home is $726,200, 2 Unit Home is $929,850, 3 Unit Home is $1,123,900 and 4 Unit Home is $1,396,800.
When the new loan amount exceeds the Conventional Loan limit for the county the property is located in, then the loan request will be considered for Jumbo loans underwriting guidelines.
However, in high cost areas, there are Conventional loans known as Super Conforming. These programs offer higher than average loan limits as determined by the average cost of a home in that area.
To check loan limits in your area, please give us a call and one of our licensed loan officers will be more than happy to assist and answer any questions you may have.