Conventional Purchase Loans by Compadre Mortgage
In house conventional loan underwriting for qualified buyers. The 20% down requirement is a thing of the past. Today's conventional market offers affordable 3% to 5% down payment options, improved rate and term options combined with simplified processing and closing.
Conforming vs. Non-Conforming
A conventional loan is a type of mortgage that is not a government insured or guaranteed loan. The term conventional loans is often interchanged with “conforming loans but there are a few differences.
There are two primary categories of conventional mortgages:
Conforming: A conforming mortgage follows guidelines set by Fannie Mae or Freddie Mac. Typically, the loan must qualify through automated underwriting (AUS.)
Non-conforming: These mortgages include both “jumbo loans” which exceed the loan limits imposed by government-backed agencies, niche products for unusual circumstances and riskier products that are much less common these days.
Why Choose a Conventional Loan?
Most home buyers choose conventional mortgages because they offer the best interest rates and loan terms—usually resulting in a lower monthly payment. And since most people choose a fixed-rate loan over an adjustable-rate mortgage, they don’t have to worry about a change in future rate.
• Sizeable, verifiable down payment. Minimum down payment options have additional requirements (i.e. first time home buyer, income limitations.)
• Stable income and qualifying debt ratio. Your monthly mortgage payments (which may include taxes and insurance) should not exceed 28 percent of your gross monthly income. In addition, your monthly mortgage payments, when combined with your other monthly debt payments (car loans, student loans, credit card bills, etc.), may be limited to a maximum of 36 percent of your gross monthly income on higher LTV loans. However, automated underwriting systems have adapted recognize stronger, more qualified applicants.
• Stable employment. Same employer or employment type for the last two years is required. Longer term employment represents stability.
• Credit score. Have a good credit score. Your credit score is the one of the most important components of qualifying. In fact, most lenders require a minimum FICO credit score of around 620 to obtain approval.
• Purchase mortgage insurance with less than 20% down.
For real time quotes and reliable, local loan services, call Compadre Mortgage at 760.385.8660.