CONVENTIONAL LOANS

Ready.  Set.  Home. 

PURCHASE A HOME WITH AS LITTLE AS 3% DOWN AND REDUCED OR NO MONTHLY MORTGAGE INSURANCE

Don’t let a big down payment keep you from purchasing your dream home

CONVENTIONAL LOAN FEATURES

  • Down payments as low as 5% for current home owners or 3% for first time home buyers

  • Reduced or no monthly mortgage insurance

  • Usually a faster, smoother process with a lower monthly payment

  • Use gift funds for your entire down payment

  • Refinance your current mortgage with as little as 5% equity (regardless of current mortgage program)

CONVENTIONAL LOAN BASICS

WHAT IS A CONVENTIONAL MORTGAGE?

  • Conventional mortgages are home loans that conform to the requirements set forth by Fannie Mae and Freddie Mac. They are not guaranteed or insured by the federal government

  • In general, conventional mortgage borrowers tend to have a secure financial standing, a low risk of defaulting, and typically make larger down payments

  • A conventional loan requires a minimum down payment of 5%

    • 3% down is allowed for first time home buyers or income at or below the area median income

  • A majority of conventional borrowers put 20% or more down to avoid paying mortgage insurance

  • You can waive escrows with as little as 5% down payment which also significantly reduces monthly mortgage insurance and closing costs

  • There are two types of conventional mortgages:

    • Conforming - loan amounts under $484,350

    • Non-conforming - which include jumbo loans and special circumstances

WHAT CAN A CONVENTIONAL MORTGAGE BE USED FOR?

  • Conventional loans may be utilized for primary or secondary residences, as well as investment properties

  • The maximum loan amount for conforming conventional mortgages can be up to $484,350, but the purchase price of the home may be higher.  For example, $605,437 sales price with 20% down

HOW DO I QUALIFY FOR A CONVENTIONAL MORTGAGE?

  • To be approved, you need good credit, a lower debt-to-income ratio, and circumstances that demonstrate your ability to pay your mortgage on time

  • The typical minimum credit score needed for a conventional loan is 680 but a credit score of 740 or above will help you achieve an elite interest rate. The higher the credit score, the more likely you are to get the lowest interest rate available

  • Conventional loans either require down payments of at least 5%. A down payment of 3% is available for first time home buyers or income at or below the area median income

    • Borrowers who put down 20% or more do not have to pay monthly mortgage insurance

    • Mortgage insurance can be cancelled on a conventional loan when the principal loan balance drops to 78% of the home’s value. This is not the case with FHA loans unless you put 10% down

WHY DO I WANT A CONVENTIONAL MORTGAGE?

  • A conventional loan has great benefits for borrowers with good credit and funds for down payment

    • Fast approval, more flexibility, and less restrictions than some of the government-backed options

    • Mortgage insurance on a conventional loan can be cancelled when your principal loan balance falls below 78% of the home’s value, which could significantly lower your monthly payment

ARE THERE ANY DOWNSIDES TO CONSIDER?

  • Conventional loans can be harder to qualify for if you have a low credit score or high debt-to-income ratio. In that case, interest rates and mortgage insurance can be higher than government-backed loans

TO CONTACT OUR TEAM,

CALL, TEXT, OR EMAIL:

SIMPLICITY MORTGAGE

386.401.9000

INFO@SIMMORTGAGE.COM

COMPANY NMLS # 1755062

411 DUNLAWTON AVENUE

PORT ORANGE, FL 32127

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