Coventional
- A conventional mortgage is a type of home loan that is not insured or guaranteed by the government, unlike an FHA or VA loan.
- Conventional mortgages typically require a down payment of at least 3% of the home’s purchase price, although some lenders may require a higher down payment.
- Private mortgage insurance (PMI) is often required for conventional loans with a down payment of less than 20% of the purchase price. PMI protects the lender in case the borrower defaults on the loan.
- Conventional mortgage terms usually range from 15 to 30 years, with fixed or adjustable interest rates.
- The interest rate on a conventional mortgage is determined by a borrower’s credit score, income, debt-to-income ratio, and other factors.
- Conventional mortgages can be used to purchase a primary residence, vacation home, or investment property.
- Conventional loans may have more stringent credit and income requirements than government-backed loans.
- Borrowers with a higher credit score and larger down payment may qualify for better interest rates and terms.
- Conventional mortgages can be refinanced to obtain a lower interest rate, reduce the term of the loan, or access equity in the home.
Requirements
Down Payment:3% of the final loan amount
Credit Score: 620 minimum
Mortgage Insurance: No (if under 80% loan-to-value)
Maximum Loan: 726,200*
*Some “high balance” areas have loan limits above the standard level
- HomeReady is a program designed to help low- to moderate-income borrowers purchase a home.
- It requires a down payment as low as 3% of the home’s purchase price.
- HomeReady borrowers may be eligible for reduced private mortgage insurance (PMI) costs.
- Borrowers can use income from non-borrower household members, such as parents or siblings, to qualify for a loan.
- HomeReady requires completion of an online homebuyer education course to help borrowers make informed decisions.
- It offers flexible funding options, including gifts, grants, and community seconds, to help with the down payment and closing costs.
- HomeReady borrowers may be eligible for a lower interest rate or reduced closing costs through participating lenders.
- The program is available for both first-time and repeat homebuyers.
- Eligible properties include 1-4 unit properties, condos, and co-ops.
- Borrowers must meet certain income requirements based on their location and the size of their household.
- HomeReady loans are serviced by Fannie Mae, but they can be originated by any approved lender.
- The program encourages sustainable homeownership and promotes access to credit for underserved communities.
- HomeReady loans can be combined with other Fannie Mae programs, such as the HomeStyle Renovation loan, for added flexibility.
- The program allows for a maximum debt-to-income ratio of 50% and a minimum credit score of 620.
Down Payment:3% of the final loan amount
Credit Score:620 minimum
Mortgage Insurance: No, if under 80% loan-to-value
Maximum Loan Limit:726,200*
*Some “high balance” areas have loan limits above the standard level
