Conventional Home Loans

Conventional Conforming Loans are loans that are originated and underwritten according to the guidelines established by Fannie Mae (FNMA) and Freddie Mac (FHLMC).  Technically speaking, a conventional loan is any mortgage that is not guaranteed or insured by the US government, such as VA, FHA and USDA.

Eligible Properties:

• Single Family Residences (SFR), one to four unit properties (attached, detached, semi-detached)
• PUD (attached or detached)
• Condo 1-4 stories

2010 Conforming Loan Limits:

$417,000 for single family properties

$533,850 for duplexes

$645,300 for tri-plexes

$801,950 for four-plexes

• Debt to income ratio guidelines
  • New house payment (principal, interest, property taxes, homeowner’s insurance, mortgage insurance (if applicable) and HOA dues (if applicable) should not exceed 28% of gross monthly income
  • New house payment AND monthly debts (including but not limited to minimum credit card payments, auto loans, student loans, child support, other properties financed, etc….) should not exceed 36% of gross monthly income.
  • These debt to income ratio guidelines can be exceeded with compensating factors such as: significant reserves, excellent credit scores, small difference between current housing cost and new house payment, etc…

• Minimum down payment – generally 5%
  • (However, few programs are still available with less than 5% i.e. USDA)

• Maximum Seller Contributions
  • If buyer puts less than 10% down, the maximum the seller can contribute towards closing costs is 3% of the sales price.
  • If buyer puts 10 to 25% down, the maximum the seller can contribute towards closing costs is 6% of the sales price.
  • If buyer puts 25% down or more, the maximum the seller can contribute towards closing costs is 9% of the sales price.
  • Regardless of down payment on investment property, the maximum a seller can contribute towards closing costs is 2% of the sales price.

• Client must have 5% of own funds – Balance can be a gift (If putting 20% down, then all can be a gift)

• Jumbo loans above $417,000 available

• Very quick approvals possible with “DU” (Desktop Underwriting) and “LP” (Loan Prospector)

• Programs have minimum FICO score requirement of 620