You've decided to take the plunge and buy a home. Congratulations! One of the first steps is figuring out what type of mortgage you want. Conventional loans are a popular choice for many homebuyers, but they can also be a bit confusing. Don't worry, we're here to help answer your most burning questions.
Q: What is a conventional loan?
A: A conventional loan is a mortgage that is not backed by the government, such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). Instead, conventional loans are offered by private lenders and follow guidelines set by Fannie Mae and Freddie Mac.
Q: How do I qualify for a conventional loan?
A: To qualify for a conventional loan, you'll typically need a credit score of at least 620 and a down payment of at least 3%. However, a higher credit score and a larger down payment can result in better loan terms and lower interest rates. You'll also need to provide proof of income and employment.
Q: What are the benefits of a conventional loan?
A: Conventional loans often have lower interest rates and fewer fees than other types of mortgages. They also offer more flexibility in terms of loan amounts and property types. Additionally, if you have a high credit score and a large down payment, you may be able to avoid private mortgage insurance (PMI).
Q: How much can I borrow with a conventional loan?
A: The amount you can borrow with a conventional loan depends on your income, credit score, and other factors. The maximum loan limit for 2023 is $726,200 for 1-unit properties – up from $647,200 in 2022.
Q: Can I use a conventional loan to buy a fixer-upper?
A: Yes, you can use a conventional loan to buy a fixer-upper, but you may need a renovation loan or a home equity line of credit (HELOC) to fund the repairs.
Q: How long does it take to get a conventional loan?
A: The time it takes to get a conventional loan can vary, but it typically takes 30-45 days from application to closing. (PS: We can help you close much faster! We're called 14 Days To Close for a reason.)
Q: What mistakes should I avoid when applying for a conventional loan?
A: Common mistakes to avoid include ignoring your credit score, not saving enough for a down payment and making big purchases during the loan process. Check out our blog post to discover the 5 top mistakes you should avoid.
We hope this FAQ has helped demystify the world of conventional loans. If you have any further questions or would like to apply for a conventional loan, please don't hesitate to contact us. We're here to help you navigate the loan process and achieve your dream of homeownership