How Conventional Home Loans Works
Conventional home loans are mortgage loans that are not insured or guaranteed by the federal government. They are popular because they often have more flexible terms and fewer restrictions compared to government-backed loans. Here’s a detailed look at how conventional home loans work.
Key Features
- Interest Rates: Conventional loans can have fixed or adjustable interest rates. A fixed-rate mortgage keeps the same interest rate for the entire loan term, while an adjustable-rate mortgage (ARM) may start with a lower rate that can change over time.
- Loan Amounts: The amount you can borrow with a conventional loan can vary widely based on the lender and your financial profile. However, there are conforming loan limits set by the Federal Housing Finance Agency (FHFA), which can change annually.
- Down Payment: Requirements for conventional loans can be as low as 3% for qualified buyers. However, a higher down payment can help you avoid private mortgage insurance (PMI).
Eligibility Criteria
- Credit Score: A good credit score is typically required for a conventional loan. Most lenders prefer a minimum credit score of 620, but higher scores can lead to better terms and lower interest rates.
- Debt-to-Income Ratio: Lenders will look at your debt-to-income ratio (DTI) to determine your ability to repay the loan. Ideally, your DTI should be below 43%.
- Income and Employment: Stable income and employment history are crucial. Lenders usually require proof of steady income for at least two years.
What To Know About Loans
What Services We Render
We offer a range of services to help you secure the best conventional home loan for your needs. Our team of experts will guide you through the entire process, ensuring a smooth and stress-free experience. Here’s what we provide:
- Personalized Loan Consultation: Understanding your financial situation and loan options.
- Pre-Approval Assistance: Helping you get pre-approved to know your borrowing capacity.
- Documentation Support: Assisting you in gathering and submitting all necessary documents.
- Loan Comparison: Comparing various loan products to find the best rates and terms.
- Closing Coordination: Managing the closing process and ensuring all paperwork is completed accurately.
- Whether you are a first-time homebuyer or looking to refinance, our goal is to make the home loan process as straightforward as possible.