Conventional Loan and Mortgage Services for Phoenix, AZ
Previously, getting a conventional mortgage meant making a 20% down payment, which wasn’t an ideal situation for first-time home buyers. Recent changes have made things different today; several conventional loan programs that require less money down (e.g. 3% or 5%) and compete directly with traditional low down payment programs such as FHA. Additionally, conventional mortgages are specifically designed for low and moderate-income borrowers.
Conventional loans are mortgages made by private lenders that meet the underwriting requirements of Fannie Mae or Freddie Mac, two of the largest acquirers of mortgages on the secondary market. In fact, nearly 70% of all home loans made in the United States are conventional.
Conventional loans cannot exceed the conforming loan limits set by the FHFA. Loans that exceed the limits are called Jumbo Loans and carry different underwriting guidelines.
Is a Conventional Loan Right for You?
Conventional mortgages make up almost 70% of all home loans in the United States. If you’re interested in a conventional mortgage, it’s important to know what to expect before applying for one of these loans. You might be wondering if a conventional loan meets your needs at the moment, and whether it allows you to achieve your unique goals. Here are some of the main advantages of conventional mortgages to take into account.
If you’re looking for a mortgage that offers a greater degree of flexibility, a conventional mortgage may be the best choice for you. This type of home loan comes in a wide range of types and sizes. No matter what your specific needs are, you can find a conventional loan that caters to them. Whether you’re interested in a 10-year fixed mortgage or an adjustable 7-year loan, you can gain access to these options by taking out a conventional mortgage.
When you take out a conventional loan, you also have the opportunity to benefit from more financial security. Interest rates for conventional mortgages are fixed, which means you’ll maintain the same monthly payment during the entire lifespan of the mortgage. In addition, your monthly payments remain unaffected by rising interest rates or decreasing house prices. This helps give you peace of mind when borrowing a conventional loan.
Faster Approval Process
When compared with government-insured loans, conventional loans are normally approved much more quickly. This is mainly because there is far less paperwork required for a conventional loan. Moreover, the approval process for government-insured loans is notoriously prone to delays. With a conventional loan, you don’t have to worry about any delays or FHA inspections that can significantly slow down the approval process.
Conventional programs require a FICO score of 620. Some programs allow scores as low as 620. Conventional Loans offer up 97% financing with no investor overlay. 1st time home buyer or new purchase in 3 years have options for only 3% down.
Private Mortgage Insurance
While conventional loans are available with only 3% to 5% down, putting up less than 20% will require you to carry private mortgage insurance (PMI). Mortgage insurance is a small fee, added to your monthly mortgage payment, which protects lenders should the loan go into default.
Conventional Loan FAQs
What documents are required for a conventional loan?
Before taking out a conventional loan, be sure to have the following official documents on hand:
- Driver’s license
- Two most recent W-2 forms
- Two most recent pay stubs, including year-to-date pay
- Full tax returns for two years if self-employed
- Two most recent asset statements, including full transaction history
- Copy of current mortgage statement if you already own
- Your insurance agent’s contact information
How much is the down payment for a conventional mortgage?
For a fixed-rate mortgage, the minimum down payment amount is 3%. For an adjustable rate mortgage, the minimum amount is 10%. Keep in mind that you normally need to put down at least 20% to avoid having to pay monthly private mortgage insurance payments for your loan.
What types of properties can I purchase with a conventional mortgage?
There are various types of residential properties that you can buy with a conventional loan. The most common types include condominiums, townhouses, lofts and single-family homes. Once you’ve chosen a residence to purchase with your new mortgage, you can opt to purchase it as an investment property, a primary residence or a secondary residence.
Do I need mortgage insurance?
Most conventional loans require private mortgage insurance (PMI), unless you put down more than 20%. The total amount of insurance you need is largely determined by how financially prepared you are to take out a loan. For example, if your credit score is on the lower end, you can expect to pay higher monthly PMI payments for your conventional loan.
What will my interest rate be?
The interest rate for your mortgage is determined by a number of factors, including the type of loan, your credit score, the down payment and the current bond market. Lenders will also take into account whether or not you have private mortgage insurance. Each of these factors plays a vital role in the interest rate that you will qualify for.
Keep these guidelines in mind to determine whether a conventional loan is right for you.
To learn more about conventional mortgages, reach out to us today.
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FAIRWAY MORTGAGE - THE POTEMPA TEAM
5450 E High St #275
Phoenix, AZ 85054
AZ License #BK-0904162
4750 S Biltmore Lane
Madison, WI 53718
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