What Is a Conventional Loan?
Conventional loans provide flexible mortgage options with competitive rates for eligible homebuyers, offering a solid financing route for various backgrounds meeting basic credit and income standards. Unlike government-insured mortgages, conventional loans are backed by private lenders, presenting advantages for qualified individuals and financing property types sometimes restricted by other loans.
Benefits:
- Higher credit scores may lead to more favorable interest rates.
- Once you reach 20% equity, the requirement for private mortgage insurance (PMI) might be removed.
- Appraisal and property standards could be less strict.
- The loan process might be quicker.
- A wider range of repayment periods might be available.
Requirements:
- Documentation verifying your income is needed.
- You’ll need to provide evidence of your assets.
- Verification of your down payment or the source of any gift funds is required.
- A minimum credit score is necessary, and it depends on the specific loan program.
- Maximum loan amounts can differ depending on the county.
To learn more about your county’s Conventional income limits, please visit: Fannie Mae and Freddie Mac
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