Conventional Home Loans
What is a Conventional Home Loan?
When the amount of the loan is within your county's loan limits and follows Fannie Mae and Freddie Mac guidelines, it is known as a "Conventional" or "Conforming" loan. The maximum Conventional loan limit varies by state and county and change yearly.
Typically, mortgage insurance (PMI) is required when borrowers put down less than 20%* on their home purchase. The PMI rate is influenced by two main factors: credit score and down payment. A higher credit score will result in a lower PMI rate, while a higher down payment will also lead to a lower PMI rate. Onshore Mortgage LLC has low down payment options available that allow you to eliminate this monthly PMI with a small increase in rate.
Conventional loans often have fewer restrictions on property types that can be financed. Single family homes, Condos, Manufactured homes, Multi-unit dwellings up to 4 units, and investment properties are all eligible as long as they meet certain income, credit and loan-to-value requirements.
What are the Requirements for a Conventional Home Loan?
Along with staying below the loan amount limits mentioned above, the borrower must also meet the following requirements to qualify for a Conventional loan:
Must have a steady income (new salary income can be used immediately with an income letter, hourly wage earners must have their income averaged over 24 months)
Must have a good credit score, typically 600 or higher
Must have a low debt-to-income ratio below 50% of your gross income
A Conventional loan may be the ideal option for you if your credit profile and income meet the requirements and you wish to buy a new house in Fairhaven, Ma or the surrounding areas throughout Massachusetts and Rhode Island. A down payment as little as 3%* on a fixed rate term or 10%* on an adjustable rate are required for conventional loans.
What are the Benefits of a Conventional Home Loan?
Conventional home loans are the most common type of mortgage in the United States. Some of the benefits include:
A predictable interest rate and monthly payment for the entire term of the mortgage
Easy documentation requirements
Potentially faster closing times
Fewer restrictions on property “type” that can be financed with a conventional loan
Lower interest rates
High loan-to-value (LTV)
What are the Conventional Loan Limits in Massachusetts?
In Massachusetts, the conventional mortgage loan limits vary based on the number of units in the property being financed. It's important to note that these limits can change each year, so it's best to check back often to get the most up-to-date information. Additionally, while conventional mortgages are a popular choice for many borrowers, there are also other options available, such as FHA loans or VA loans, which may have different maximum loan limits and requirements. Ultimately, the best type of mortgage for you will depend on your individual financial situation and goals.
What are the Conventional Loan Limits in Rhode Island?
If you're interested in taking out a conventional mortgage in Rhode Island, it's important to keep these limits in mind to ensure you're eligible for financing.
If you're looking for a low down-payment mortgage option in Massachusetts, a Conventional loan may be the right choice for you. Contact Grant Menard today to find out more about conventional home loans and how they can help you buy your dream home.
*Credit and income restrictions do apply. Please visit our Disclosures page for a detailed breakdown of all loan types.