A Conventional Home Loan is a loan that is not insured or guaranteed by the government. Conventional home loans must meet the guidelines for credit, assets and income set by Fannie Mae and Freddie Mac. (These are government sponsored enterprises (GSE) that purchase and securitize Conventional Loans.)
To qualify for a Conventional Home Loan, eligible borrowers can finance a maximum 95% of the purchase price. A Conventional home loan for greater than 80% of the property’s value will require Private Mortgage Insurance (PMI). This protects the lender in case the borrower defaults on the loan. Typically, a strong credit history is required to qualify for a Conventional Home Loan. These loans also have the strictest requirements for debt to income ratios. Conforming loan limits are set and reviewed annually by Fannie Mae and Freddie Mac.
A Conventional Home Loan may be used to purchase or refinance a 1-4 family residence, a townhouse, an approved Condominium or Co-op, or a Planned Urban Development (PUD). Both owner occupied and investment properties qualify. Gifts and sellers concessions are both allowed with certain limitations.
For more information, or to pre-qualify for a Conventional Home Loan, contact us today at 888-247-5757.