Conventional Home Loans
If you’re an experienced home buyer, you’ll likely have heard of the term “conventional home loans” before. Conventional loans are one of the most common forms of mortgages. They include any type of loan that is not backed by or offered by a government entity. Rather, these loans are typically available through private lenders, including credit unions, mortgage companies, and banks.
If you are considering a conventional home loans in North Carolina, South Carolina, or Florida, don’t settle for a process that’s anything less than exceptional. Our team at 1st Advantage Mortgage wants to help make your home-buying experience less stressful so you can focus on what really matters – like where you’re going to put the couch.
Our Mortgage Experts are available today to help you navigate your options, choose which home loan type is right for you, and guide you through the process.
What Is A Conventional Home Loans
A conventional loan is a mortgage used to purchase a home or other real estate. These loans are not backed by government agencies or offered through government programs. Rather, they are available to consumers through banks, credit unions, mortgage companies (1st Advantage Mortgage), and other financial institutions.
It is important to know that some conventional loans can be guaranteed by Fannie Mae (the Federal National Mortgage Association) or Freddie Mac (the Federal Home Loan Mortgage Corporation). Nevertheless, they are not offered directly to consumers from these agencies.
Most frequently, conventional loans have a fixed interest rate. That means the loan will have a single interest rate applied to it that lasts for the life of the loan. However, there are Adjustable-Rate Conventional Mortgages, too, which fluctuate with the key lending rate.
Conventional Loan Requirements For Home Buyers
Since a conventional mortgage loan is not backed by the federal government, these loans typically have much stricter requirements – as well as more varied terms – for borrowers. There is a lot more room for banks and other credit lenders to create specific requirements for these loans.
Home condition requirements are a factor, too. To get a conventional home loans, lenders need to ensure the home is worth at least as much as it is financing and in good overall condition.
Advantages & Disadvantages of A Conventional Home Loan
Did you know that conventional loans offer advantages, such as more credit access? Conventional loan rates can be very competitive too. These are sometimes lower than what is available through an FHA (Federal Housing Administration) loan. Another differentiating factor is mortgage insurance. Consumers do not have to pay mortgage insurance on conventional loans, but they do on most traditional FHA loans.
FHA or Conventional Loan? Which Is Better?
This depends on a person’s individual situation. FHA loans and other government-backed loans can be a good deal. Federally backed loans may offer loans to those who have lower credit scores or a smaller down payment. Yet, they may have stricter requirements and may not loan as much as a conventional loan would. It is best to compare both options before making a decision – contact one of our Mortgage Experts to see which home loan best fits your needs!
Conventional Loan Limits in the Carolinas
The amount you can borrow is set by the lender. However, there are also additional limits. Conforming loan limits for 2024, for example, is $766,550 for most areas. In areas of high real estate value, this can increase to $1,474,400. Creditworthiness and income verification will determine if you fit these requirements.
Who Qualifies For A Conventional Home Loan?
You may qualify for a conventional loan if:
- You meet the credit score requirements: Most lenders require a score of at least 680, but 1st Advantage Mortgage offers these loans with a credit score as low as 620. The best rates are available for those who have a score over 740.
- Debt to income: Lenders need to know you have an acceptable debt-to-income ratio, which is the amount of debt you have each month compared to your income. Generally, this should be about 36%.
- Down payment: The conventional home loan down payment requirements will vary, but generally requires about 20%. For those who want to avoid mortgage insurance, you can qualify for a conventional loan with as little as 3% down for first-time home buyers and 5% for most other borrowers.
How to Apply for a Conventional Loan in the Carolinas
To apply for a conventional mortgage loan, consumers will need to submit an application providing information to verify income, credit history, and other financial obligations. Borrowers need to complete a full mortgage application to verify their identity as well. Then, lenders will work to verify this information before offering a loan.
When you apply for a conventional loan with the mortgage expert at 1st Advantage Mortgage, you get to close with confidence and enjoy our five-star process. Ready for better?
Timeline
Applying for a loan takes just minutes. From there, lenders need to start processing information. Depending on the lender, this can take from 1 day (at 1st Advantage Mortgage) to three months to complete.
Documents & Paperwork to Submit
Documentation for a conventional home mortgage includes several items, including:
- Proof of Income: This includes pay stubs, two years of federal tax returns (if self-employed), W-2 statements, and other documentation proving income.
- Asset Verification: In addition to this, lenders need to see proof of assets you own, such as investment accounts and bank statements to prove down payments and cash reserves.
- Identification: You will need to show proof of your identity, such as your driver’s license
All of this information is verified as accurate to ensure only those who should apply can do so.
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Frequently Asked Questions
Conventional Home Loan FAQs
If you have questions about securing a conventional home loan in our team is here to help you. Our Mortgage Experts are happy to answer all of your questions and provide specific info to you. Here are some common questions about conventional loans:
What is a conventional Home Loan?
A conventional mortgage is a secured loan used to purchase a home or other real estate. These loans do not have any federal government backing, which means – unlike an FHA loan – the loan is provided through mortgage companies, credit unions, and banks.
How does a conventional loan work?
Conventional home lenders will provide you with a loan offer once the value of the home is verified through a home inspection. You will need to meet a variety of requirements during this process, including meeting credit score requirements, income verification, and having a down payment. Once you are approved for the loan, then you will make monthly payments to cover the purchase price of the home plus interest.
Are there different types of conventional loans?
There are several types of conventional loans, and interest rates will vary. Fixed-rate conventional loans are those that have an interest rate that remains the same throughout the life of the loan. Another option is an adjustable-rate mortgage. In this loan, the interest rate will remain the same for a short period after which it can adjust as the key lending rate changes.
Legal information
² No -Down Payment Disclaimer: Closing costs and fees may still apply
³ Lending Disclaimer: Mortgage rates are subject to change and depend on the borrower(s) qualification. APR rate(s) quoted are based upon a (loan amount), (loan term, including whether fixed or ARM) year.
⁴ Refinancing Disclaimer: When refinancing your mortgage , you can typically reduce your monthly payment amount. However, your total finance charges may be greater over the life of your loan. Your 1st Advantage Mortgage loan professional will provide you with a comprehensive refinance comparison analysis to determine your total life loan savings.
⁵ VA Mortgage Disclaimer: VA home loan purchases offer options for a 0% down payment, no private mortgage insurance requirements, and competitive interest rates with specific qualification requirements. VA Interest Rate Reduction Loans (IRRRL) are exclusively for veterans with current VA loans – current loan rate restrictions apply, and limits to recoupment of costs and fees apply. VA cash-out refinances are available for veterans with or without current VA loans. Policies and guidelines may vary and are subject to individual borrower(s) qualifications. Program and lender overlays apply.
⁶ Down Payment Assistance Disclaimer: First-lien interest rates may be higher when using a DPA.
⁷ Pre-Approval Disclaimer: Pre-approvals are granted to clients who meet qualifying approval criteria and specific loan requirements at the time of application. Results may vary.
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