Conventional Loans for First Time Home Buyers
Conventional Home Buying Loans
Enjoy Some of the Best Financing Available with Conventional Mortgages.
Home Buying Loan Programs · Low Rates · Avoid PMI · Fast Loan Processing.
An exciting adventure begins when you buy your first home. The promise of the American Dream fills you with excitement and sometimes a feeling of euphoria. It is certainly an exciting time in your life, especially if you feel like you are completely prepared for the process. Many first time home buyers have limited knowledge and understanding of how to get a mortgage to buy a home. We can help simplifying the process for you, show you all of your options, and help you determine what the right first time home buyer loan is for you.
For nearly all home buyers, you will want to choose between either a conventional loan or FHA loan. The only two exceptions to this rule are if you are buying a rural property and/or if you are a veteran. If you are not in the military, a veteran, or buying a rural property then you want to compare your options with a conventional and FHA loan. For those who have stronger credit and can put a little more money down for their home purchase, a conventional mortgage usually is the evidential best choice.
Some Basics Behind Conventional Loans
Mortgage companies and banks offer conventional home loans to everyday people who want to make their first home purchase, refinance an existing loan, or take cash out of the equity in their home. Unlike loans insured by the FHA, VA and USDA, conventional loans do not have insurance from any government agency in the event you default on your loan.
However, mortgage companies Fannie Mae and Freddie Mac purchase conventional loans from lenders after closing (this is called the secondary market). Fannie Mae and Freddie Mac then securitize each mortgage into an investment vehicle. Because of this agreement, mortgage lenders underwrite their loans according to the guidelines set forth by Fannie and Freddie. You are probably wondering why this is important. Well, the guidelines determine whether or not you qualify for a conventional loan. Here are a few important guidelines for first-time homebuyers in no particular order:
- You should have a credit score of 620 or better. If you attempt to qualify with a lower score, chances are you will pay a higher interest rate or face an outright denial.
- Fannie Mae and Freddie Mac set the maximum amount you can borrower at $417,000. Loans at or below this figure are known as conforming loans and attract lower interest rates. Anything greater than the amount are considered non-conforming, or ‘Jumbo Loans’, and subject to much higher interest rates and closing costs.
- Most who apply for a conventional loan will be required to place 5% or more down. There is a conventional 97 loan, but it is a little more limited in who qualifies for that compared to 5, 10, or 20 percent down. If you put 20 percent down you can completely avoid having to pay any monthly mortgage insurance (there is also not any upfront mortgage insurance required on conventional loans, like it is on FHA loans).
- Down Payment Source – With conventional loans, you must pay the down payment with your own funds from a bank account or asset. With an FHA loan you can borrow or be given the down payment.
The best way to find out what you can qualify for, what your payment will be, and get all of your questions answered is to speak with a loan representative. If you want to get prequalified without having to provide any personal information like your social security number, you can get an unofficial pre qualification. Then, you can proceed to get an official approval at anytime.
Down Payment Assistance for First-Time Homebuyers
If you plan on buying a home for the first time using conventional loans but cannot afford all or part of the down payment, then you may qualify for assistance. The Department of Housing and Urban Development (HUD) offers secondary financing specifically for the down payment through a network of approved lenders and organizations. You finance your down payment with a no interest loan separate from the mortgage loan. Known as DAP (Down Payment Assistance Program), the network has an online portal where you can locate financing for the down payment in your area. Apply today for your first-time home conventional loan and learn more about assistance programs.
Explore your loan program options by applying today. Lock in low interest rates by working with a mortgage representative that guides you to thousands of dollars in savings. Take the guesswork out of qualifying for a conventional first-time homebuyer loan and find the program that puts the American Dream well within your reach.