Conventional mortgages are ideal for borrowers with good or excellent credit. They follow fairly conservative guidelines.
• Borrower credit scores: Minimum 620
• Minimum down payments: Minimum 3% with Home Ready Fannie Mae program or 5% for everything else.
• Debt-to-income ratios: Maximum 49.99% vs 56.99% for FHA and 64.99% for VA.
• Low down payment required (3 percent minimum)
• Mortgage insurance is required for loans exceeding 80 percent loan-to-value however, we have lender paid MI financing. See our No PMI page.
• Conventional mortgage insurance is only monthly or single premium (FHA upfront and monthly premiums, and VA has a similar fee called Funding Fee)
• Conventional mortgage insurance is very credit sensitive but will automatically end at 78 percent loan-to-value. (FHA will stay for the entire life of the loan)
• Conventional loans can cover a higher loan amount; up to $453,100.00 vs. $345,000.00 for FHA. Loan amounts over $453,100.00 become “Jumbo loans”.
• Even though conventional loans may have higher interest rates, their monthly payments may still be lower.
No PMI / Lender Paid Mortgage Insurance
For many potential homebuyers, the cost of mortgage insurance can be a big turn-off. For those who can’t come up with a 20 percent down payment, there’s an alternative that may save you money. Mortgage insurance is what is required on any mortgage with less than 20 percent down (or 20 percent equity when refinancing). It covers the additional risk the lender assumes in accepting a smaller down payment.Though you don’t hear a lot about lender-paid mortgage insurance (LPMI), it’s an option that’s been growing in popularity and which can save you hundreds, even thousands, of dollars a year in mortgage costs. It’s something many borrowers can benefit from if you’ve got good credit or you are planning on a small down payment and expect to either sell the home or refinance within a decade or so. We have this option available, and if you are interested, don’t hesitate to ask.
We have excellent Conventional loan rates although most of our clients putting less than 20% down payment will finance the loan with lender paid mortgage insurance, as the payments are usually lower than paying with mortgage insurance, even the rate is slightly higher.
For information on this program contact us at 954-866-0000 or email us at info@BluecastleLending.com. Bluecastle Lending is an Equal Opportunity Lender