1st Advantage Mortgage is a licensed mortgage broker and lender in Charlotte, NC. As a mortgage lender and broker, we compare conventional pricing across wholesale lenders, including mortgage insurance, so you can evaluate the total monthly cost.
What Is a Conventional Home Loan?
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. We can place conventional loans up to $845,000 through select wholesale lenders. In high-cost areas the limit is higher. Creditworthiness and income verification will determine if you fit these requirements.
Who Qualifies For A Conventional Home Loan?
- You meet the credit score requirements: Conventional loans typically require a 620 credit score. Automated underwriting may approve lower scores with strong compensating factors. The strongest pricing is usually available at 740 and above. Pricing varies by lender, credit profile, and loan scenario.
- 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: Conventional loans allow down payments as low as 3% for first-time buyers and 5% for most other borrowers. Putting 20% down avoids mortgage insurance. With less than 20% down, private mortgage insurance applies, but it can be removed once you reach 20% equity.
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
- 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.
Let's Get Started
If you’d like to discuss your options further or have any questions about our lending services, speak with one of our friendly Mortgage Experts.
Ready to get started? Great! Click “Apply now” below to begin your application.