We will help you get into your dream home because we offer a full array of mortgage products to fit your needs. This section is here to help you understand Conventional mortgage products. When you hear the term “conventional”, most likely you’re hearing about Fannie-Mae (FNMA) and Freddie Mac (FHLMC). A conventional loan is available with as little as a 3% down payment. The most popular conventional loan is a fixed rate Fannie-Mae (FNMA) loan. Any conventional loan with less than 20% down payment will have monthly mortgage insurance. We have options to remove the mortgage insurance with as little as a 5% down payment but utilizing that option will increase the rate. Most of the time, clients will take the lower interest rate and then cancel the mortgage insurance once they have sufficient equity. In order to remove the mortgage insurance after you have purchased the home, you need to prove that you have at least 22% equity. When first purchasing the home, in order to not have mortgage insurance, you need to be prepared to pay at least a 20% down payment towards your home.
The minimum credit score needed in order to obtain a conventional loan is 620. There are three credit bureaus that are considered when buying a home. The three credit bureaus are Equifax, Experian, and TransUnion. Each of these bureaus will give their own credit score (risk rating) for you. Sometimes, the credit bureaus will generate the same score only by coincidence, but most of the time you will see three different scores. The highest credit score given by any of the three bureaus is disregarded, the lowest credit score is then disregarded, and you are left with your middle credit score. The middle credit score is what is utilized to determine your eligibility and several other factors while obtaining a home loan. The property types allowed for conventional financing are single family homes, townhomes, villas, duplex(2 units), triplex (3 units), quadplex (4 units), and condos. You are able to live in one of the multi unit homes (duplex, triplex, or quadplex) and have the rental income to be received on the other units count towards your income to help qualify. Income also needs to be verified while obtaining a conventional mortgage. If you are self-employed, it is possible that we will review only your most recent tax year personal and business (if applicable) tax returns. If you are a wage-earner, someone that obtains a W2 at the end of the year, we will review your previous two year tax returns along with a current paystub. Don’t worry – if your previous income is significantly lower than your current income, we can use your higher income just as long as it is justified (increase in pay or a pay raise, promotion, working overtime hours, etc.). If you are retired, we would just need proof of your retirement income (Social Security, pension, etc.). We will also need to verify assets (bank statements) in order to obtain a conventional loan. Again, don’t worry – your funds to close can come as a gift just as long as it comes from an acceptable source (ie no cash money, unverifiable cash, etc.). Gift funds have to be verified but they are allowed.