What is a Conventional Loan?
A conventional loan is a type of mortgage loan that is not made, insured or guaranteed by a government entity, such as the Federal Housing Administration (FHA). Instead, it is a home loan that follows guidelines set by Fannie Mae and Freddie Mac. Conventional mortgages are also known as Conforming Home Loans due to the fact that they “conform” to the standards set forth by Fannie Mae and Freddie Mac.
What are the credit score requirements for a Conventional Home Loan?
The minimum credit score for most conventional loans is 620. Conventional home loans rely heavily on credit scores. A home buyer with a 620 credit score will have a rate about 0.50% higher than a home buyer with a 740 credit score.
What are the down payment requirements for Conventional Mortgages?
It’s a common myth that you must have a 20 percent down payment for a conventional mortgage. In the real world, there are options for as little as 3% down with Fannie Mae HomeReady or Freddie Mac Home Possible
Do Conventional Home Loans require Mortgage Insurance?
Private Mortgage Insurance (PMI) is required on Conventional home loans with less than a 20% down payment. PMI, just like mortgage rates, will vary depending on your credit score and your Loan to Value (LTV). PMI on Conventional Loans is cancelled once the balance on your mortgage reaches 78% of the lesser of the last appraised value or purchase price.
Can I get a Conventional Home Loan after a bankruptcy or a foreclosure?
Short answer is yes you can qualify for a Conventional mortgage after being discharged from a bankruptcy or after a foreclosure.
However, there are waiting periods that must be met and you must demonstrate that you’ve reestablished your credit. The waiting periods are:
Chapter 7 Bankruptcy – 4 years, measured from the discharge date. Although guidelines do allow for as little as 2 years if extenuating circumstances can be documented, it is extremely rare.
Chapter 13 Bankruptcy – 2 years, measured from the discharge date OR 4 years, measured from the dismissal date.
Foreclosure – 7 years, measured from the date that the property transferred out of your name. However, if the foreclosure was included in a Bankruptcy, then the bankruptcy waiting periods would apply.
Are you interested in additional information on a Conventional Home Loan? Complete some basic info to obtain your free Ohio Mortgage Rate Quote Request or Contact Me
