Our conventional program is ideal for first-time home buyers, borrowers with high credit scores and income reported on a W-2
What is a Conventional loan?
One of the most common types of loans that home buyers come across is the Conventional loan. These loans are not backed by the government, like FHA and VA loans. Conventional loans follow the guidelines that Fannie Mae and Freddie Mac – two agencies responsible for standardizing mortgage lending – have set. But it is lenders that are responsible for approving their Conventional loan.
What documentation do borrowers need for a Conventional loan?
Among the documents borrowers may need for a Conventional loan are:
Fully completed loan application (1003)
Copy of driver’s license
Two years of full tax returns if self-employed – all pages and all schedules
Two years of W2’s for all borrowers
Two most recent pay stubs with year-to-date pay for all borrowers
Two most recent asset statements – all pages with full transaction history for all accounts
Copy of their mortgage statements on any properties owned
What types of homes can borrowers purchase with a Conventional loan?
Borrowers can purchase property types such as single-family homes, 1-4 Units, condominiums, and townhomes. These homes can be purchased as primary residences, second homes, or investment properties.
Will borrowers need mortgage insurance with a Conventional loan?
Private mortgage insurance (PMI) is typically required on a Conventional loan any Fannie Mae/Freddie Mac loan when there is less than a 20% down payment/equity position.
What credit score do borrowers need to qualify for a Conventional loan?
Credit score requirements for Conventional loans vary depending on the lender, but a Conventional loan may require on average a higher credit score than an FHA loan. For MCF Mortgage’s Conventional loans, borrowers will need to have at least FICO 620.
How much do borrowers need for a Conventional loan down payment?
The minimum down payment amount for a Conventional loan is 3% for a fixed-rate mortgage and 10% for adjustable-rate mortgages. It is best to have as much saved up as possible for a Conventional loan down payment as a down payment of 20% or more can eliminate the need to pay monthly private mortgage insurance (‘PMI’).
How much can clients borrow with a Conventional loan?
Fannie Mae and Freddie Mac set Conventional loan limits and they can vary by different areas in the U.S. To see what the loan limit is in their area, click here
What are the benefits of a Conventional loan?
Conventional loans may offer some advantages to other loan types. They require down payments as low as 3%, there may be less paperwork, and borrowers will not have monthly primary mortgage insurance (‘PMI’) with a down payment of at least 20%.