Conventional Loan Guidelines:

We explain the Conventional loan guidelines here.  Conventional loan require a down payment in the amount of 3% or more.  There are two types of this loan product.  There is a regular 3% down Conventional loan and then there is the Home Possible.  The 3% down Home Possible program has limitation.  First off, it contains  income requirements.  That means you can’t make more than a certain income restriction.  Your country code determines your income.  These income requirements change yearly so check with us first for the latest guidelines.  One also needs a decent fico score to qualify.

Alternative Option:

Since most people don’t meet the 3% down guidelines the second best option is usually the 5% down Conventional loan program.  Borrowers need a middle fico score of 620 or higher to qualify.  After you put your down payment money down on a home, you still need some money left over.  We call this  reserve requirements.  Usually, one needs 1-3 months worth of future mortgage payments in an account which can include one of the following:  checking, savings, cd, money market, mutual funds, 401 k plan, etc.  The lender asks you to provide copies of your last two bank statements to verify your actual account balance.  All Conventional loans where the loan to value ratio exceeds 80% do carry mortgage insurance.  Monthly mortgage insurance premiums can be expensive.

What can one do to lower their monthly mortgage insurance premium?  First off, prior to even applying for a new home mortgage loan, one needs to clean up their credit report first.  Did you know that your home mortgage interest rate is based on your fico score?  The lower the fico score the higher the home mortgage interest rate.  Secondly, you might want to put more money down on the home.  The higher the down payment the lower the mortgage insurance premium percentage.  Look at it this way.  You might have to wait an extra month or two to put more money down on a home.

What is the maximum Conventional loan limit?

The maximum Conventional loan limit is currently $424,500.  If your loan amount is between$424,501 and $435,000 if you have the money you are better off if you put more money down and obtain a Conventional loan rather than a Jumbo loan.  Why?  Because the home mortgage interest rate is going to be lower and the qualification process is much easier.

Still need answers to your home mortgage loan questions?  Call and talk to a live person at 602-358-8717.