Are you interested in purchasing a home, and trying to determine the optimal financing option for your current situation? Conventional loans are an excellent mortgage option that have favorable terms and rates and are completely backed by private lenders. If you are looking into buying a home in Mount Pleasant, South Carolina, and want to learn more about your financing options, Lucey Mortgage Corporation is here to help. Read on to learn more about financing the purchase of a home with a conventional loan.
Conventional Loans: Essential Information
The two main types of home loans are conventional and nonconventional mortgages. Nonconventional mortgages such as VA and FHA loans, are insured by the federal government. Conventional loans, on the other hand, are insured through private lenders and require private mortgage insurance. Conventional loans are divided into two types, conforming and noncomforming. Conforming loans are loans that can be for the amount of up to $548,250. If you need a loan that exceeds that amount, you will need to apply for a noncomforming loan, also known as a “jumbo loan.”Because they are not covered by the government if a borrower is unable to make mortgage payments, conventional loans pose a higher risk to lenders and tend to have more selective application requirements for a home buyer. Conventional loans typically require a higher down payment amount than unconventional loans, but there are still conventional loans available with a down payment as low as 3.5%.
The Benefits of Conventional Loans
Conventional mortgages can offer a home buyer many advantages, including:
- Quicker loan processing
- Many down payment options, some even as low as 3.5%
- If you are able to make a 20% down payment, you will not be required to pay for private mortgage insurance
- There are a variety of terms available, ranging from ten to thirty years
- Conventional loans offer low interest rates and offer both adjustable and fixed rate options
Qualifying for a Conventional Loan
Conventional loans have specific application requirements that must be met in order to qualify. Typical conventional loan requirements include:
- Proof of income and tax returns from the past two years
- A minimum credit score of 620 – 640
- A debt-to-income, (DTI), ratio of 36% – 43%
- A minimum down payment of 3%. It is important to note that if you have a lower credit score, you may be required to make a higher down payment
Purchase Your Dream Home With a Conventional Loan
If you are interested in purchasing a home in Mount Pleasant, South Carolina, and want to learn more about the financing options that will work the best for your situation, the loan specialists at Lucey Mortgage Corporation can help. Contact our office today for a consultation.