Conventional loans are mortgage loans offered by non-government sponsored lenders. A conventional, or conforming, mortgage adheres to the guidelines set forth by Fannie Mae and Freddie Mac. These Government Sponsored Enterprises (GSE’s) will buy the loans from conventional lenders and sell them to investors.
While many think that a 20% down payment is required for all conventional loans, many lenders now offer down payment options as low as 5%. In some areas you can even be approved with as little as 3% down. There are certain geographic and income limits for the 3% down options but they are certainly worth looking in to.
Jordon Yates and his mortgage team are a leading provider of Conventional loans all over Chicago and surrounding areas like Oak Park, Naperville, Libertyville, Evanston, Northbrook as well as the whole state of Illinois. For more information on Conventional loans and how to qualify, speak with a Conventional home loan expert at 312-600-4513 or click the “Apply Now” button at the top right of this page.
Advantages of Conventional Loans
There are many advantages to a conventional loan vs. an FHA loan. One of the most apparent is the lack of Up Front Mortgage Insurance (UFMIP). While FHA requires this UFMIP a conventional will not, and that could mean not having to finance several thousands of dollars more over the life of the loan. Additionally, if the loan has a Loan to Value of 80% or less Private Mortgage Insurance will not be required.
How to Qualify for a Conventional Loan
Conventional loans generally require slightly larger down payments than government-backed loans. This slight difference may make it more difficult for many borrowers who do not have enough money saved. Interest rates are also set by individual lenders and can exceed those of FHA and VA loans. However, for the most part, rates for conventional loans and for FHA loans do not vary significantly as they are both competing in the same market. A conventional loan does have a lower Debt to Income ratio requirement that, depending on the lender, will range from 43% – 50%. The Loan to Value is also more stringent and is typically set at 95%. There are a few exceptions to this rule depending on the geographic area and can be as high as 97%. Credit score requirement are the biggest difference and Conventional Loans usually require a credit score of 620 or higher by most lenders.
Conventional Loan Limits – Illinois
General Loan Limits for 2019
|Units||Contiguous States, District of Columbia, and Puerto Rico||Alaska, Guam, Hawaii, and the U.S. Virgin Islands|
Maximum Loan Amount for High-Cost Areas for 2019
A number of states (including Alaska and Hawaii), Guam, Puerto Rico, and the U.S. Virigin Islands do not have any high-cost areas in 2019.
|Units||Contiguous States, District of Columbia+||Alaska, Guam, Hawaii, and the U.S. Virgin Islands|
Apply for a Conventional Loan
Jordon Yates and his mortgage team are a leading provider of Conventional loans all over Chicago and surrounding areas like Oak Park, Naperville, Libertyville, Evanston, Northbrook as well as the whole state of Illinois. For more information on Conventional loans and how to qualify speak with a Conventional home loan expert at 312-600-4513 or click the “Apply Now” button at the top right of this page.