Conventional, also known as Conforming Loans is the most common type of loan program available. It’s a great option if you have a solid credit score and minimal debt!
A conventional/conforming home loan refers to a mortgage loan that meets the guidelines and criteria set by government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac. These guidelines include specific loan amount limits, credit score requirements, and other underwriting standards. Conforming loans are considered lower risk by lenders because they adhere to these standardized criteria, making them more attractive for sale in the secondary mortgage market.
Key characteristics of a conventional/conforming home loan include:
- Loan Limits: There is a maximum loan amount that a conforming loan can be. These limits are set annually and vary by location, taking into account regional housing market conditions. To get the most current information on the loan limits within Mohave County and the state of Arizona call or email our office.
- Credit Score Requirements: Borrowers typically need a credit score that meets the minimum standards set by the GSEs. While specific requirements may vary, a good credit score is generally important for securing a conforming loan.
- Down Payment: Conforming loans may have different down payment requirements, but they often offer more favorable terms for borrowers who can make a substantial down payment.
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Loan-to-Value Ratio: The loan-to-value (LTV) ratio, which is the ratio of the loan amount to the appraised value of the property, is an important factor. Lower LTV ratios are often preferred.