Conventional home loans come in many varieties.
First Time Home Buyer loans such as Conventional 97, Home Ready and Home Possible make ownership closer than ever.
What is a Conventional Home Loan?
A conventional loan is a type of mortgage that is not insured or guaranteed by the government. Instead, they are backed by private lenders, such as banks, credit unions, and other financial institutions. They are also often subject to guidelines set by government-sponsored entities like Fannie Mae or Freddie Mac.
Generally speaking, a Conventional loan has more strict qualification than other loan types. For example, maximum debt-to-income limits are lower and credit scores are usually required to be above 620. The minimum down payment is 5%.
Home Ready and Home Possible
Fannie and Freddie each offer a low down payment product. The minimum down is 3% of the sale price. They allow a debt to income ratio up to 50%. However, they each have income limits to qualify.
A HomeReady mortgage is a Fannie Mae program designed to help low- to moderate-income borrowers purchase a home with a low down payment and more flexible lending terms. It allows for down payments as low as 3% and offers flexible options for funding the down payment and closing costs. HomeReady also considers income from non-traditional sources and includes co-borrowers, even if they don't live in the home. You do NOT have to be a first time home buyer.
A Home Possible loan, offered by Freddie Mac, is a mortgage program designed to help low-to-moderate income borrowers and first-time homebuyers purchase a home with a low down payment. It features flexible down payment options, reduced mortgage insurance, and potentially lower fees compared to traditional mortgages. You do NOT have to be a first time home buyer.
Conventional 97
Conventional 97 is also a low down payment product. The minimum down is 3% of the sale price. And, it allows a debt to income ratio up to 50%. However, it does NOT have income limits to qualify. You do have to be a first time home buyer.
Free Consultation
If all of this information is a little overwhelming, just give us a call to discuss your individual situation and we will recommend the loans that are right for you.