Conventional loans are simply a prime loan which conforms to the limits stipulated by Fannie Mae and Freddie Mac. The limits differ from county to county and you should reach out to a knowledeable loan officer to verify the limits in your county.
Conventional loans can be used to purchase a home, refinance a home to lower the rate and/or monthly payment, and to take equity out of the home.
Eligibility Requirements for Conventional Loans
These are the basic requirements when applying for a conventional loan:
- You need to have a good credit score in order to qualify for a conventional loan.
- You must be able to afford a down payment of at least 3-5%. How high your down payment will be depended on other factors (such as your credit score, debt to income ratio and reserves).
- Your income-to-debt ratio needs to be solid as well. Your monthly bills should not exceed half your income, nor should your mortgage payments add up to more than a third of it.
- You will need to be able to furnish documents which prove your income, and employment status, work history, taxes, etc..
