Navigating Conventional Loans With MortgageCS

“Ben and his team at Mortgage CS made our refi easy and understandable. The process started before the pandemic escalated but we were still able to meet virtually and complete the refi respecting all social distancing guidelines. I highly recommend Ben Stucker and Mortgage CS.”

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Kristin Vogel
April 21, 2020

At MortgageCS, we hold a firm belief that informed financial choices pave the way to realizing your dream of owning a home. Among the many options that await potential homeowners in the world of mortgages, Conventional Loans stand out as a compelling avenue. These loans carry a host of advantages, opening doors for numerous individuals aspiring to become homeowners. Join us as we delve into the essence of this loan type, explore its beneficiaries, unravel the requirements for qualification, and draw comparisons with alternative borrowing options.

Decoding Conventional Loans

A conventional loan is a type of mortgage that is not insured or guaranteed by the federal government. Instead, it is backed by private lenders such as banks, credit unions, and mortgage companies. It adheres to the lending guidelines set by two government-sponsored enterprises – Fannie Mae and Freddie Mac.

The Gateway to Conventional Loans: Qualification Essentials

For you to qualify for a conventional loan, you'll need to meet certain criteria. These include a strong credit score, stable income, and a significant down payment. Your Debt-to-Income ratio (DTI) will also factor in the approval process. While these may seem stringent, they often result in more favorable loan conditions compared to government-insured mortgages.

  • Credit Score: A minimum of 620 is preferred, with better rates offered to those with scores above 740.

  • Down Payment: As low as 3% for some loans; however, a 20% down payment can help you avoid paying Private Mortgage Insurance (PMI).

  • Debt-to-Income Ratio: Ideally, no more than 36% of your income should go towards debts, including your mortgage, although there can be exceptions up to 50%.

The Ideal Candidate: Who Fits the Conventional Loans Mold?

Conventional loans are a perfect fit for borrowers with a strong credit score, stable income, and the capacity to make a substantial down payment. They are also great for people landing on properties that meet standard condition requirements set by Fannie Mae and Freddie Mac guidelines. 

Conventional Loans vs. The Rest: The Key Differentiators

VA Loans vs. Conventional Loans: VA Loans, exclusive to veterans and active-duty servicemembers, offer unique benefits like zero down payment and no mortgage insurance. Conventional Loans, while more widely available, typically require a down payment and might involve private mortgage insurance (PMI) until you reach 20% equity.

FHA Loans vs. Conventional Loans: FHA Loans accommodate lower credit scores and smaller down payments, coupled with mandatory mortgage insurance. Conventional Loans demand a slightly higher credit score but provide the advantage of adjustable mortgage insurance. PMI can be eliminated once you attain 20% equity.

Jumbo Loans vs. Conventional Loans: Jumbo Loans exceed conventional loan limits, catering to high-value properties. In contrast, Conventional Loans have standardized limits, making them a versatile choice for a broader spectrum of buyers.

Home Ready / Home Possible Loans vs. Conventional Loans: Geared towards low- to moderate-income individuals, these programs offer reduced down payment requirements. While akin to Conventional Loans, they are subject to specific income thresholds and might entail homebuyer education.

The MortgageCS Advantage: Your Journey, Our Mission

The mortgage world is complex, with its ever-changing guidelines and programs. However, you do not have to navigate these waters alone. The Concierge team at MortgageCS is committed to guiding you, like family, through your mortgage journey. 

Whether a conventional loan is your best bet or another option better suits your circumstance, we are dedicated to helping you make informed decisions that align with your homeownership goals. We provide white-glove service from start to finish. Trust MortgageCS to demystify mortgage complexities and assist you in making the right choice for you and your family's future.

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