You undoubtedly have a vision of what your first house will look like: a city apartment, a beautiful cottage, or a rustic cabin. But can you say the same thing about your mortgage?
When it comes to financing your house, you have several options based on your income, debt, credit history, and other considerations. While each loan type has advantages and disadvantages, the conventional loan remains the most popular house loan for first-time and repeat purchasers.
What is a Conventional Loan?
A conventional loan is a home loan that is not backed or insured by the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). Conventional loans are issued by various lending institutions, including banks, credit unions, and mortgage companies.
Loan amounts for conventional loans can range from the minimal conforming loan limit, which varies by county and is determined by the size of a particular mortgage company, to amounts upwards of $1 million. The maximum loan amount is determined by various factors, including the loan type, loan purpose, debt-to-income ratio, credit score, and the property you’re looking to buy.
How to Qualify for a Conventional Loan
Conventional loans are available to both first-time homebuyers and repeat buyers, and have a wide range of benefits, including lower interest rates and flexible underwriting guidelines.
In general, conventional loans have the following requirements:
– You have a steady income.
– You have a job.
– You have a steady work history.
– You have a reasonable debt-to-income ratio.
– You have good credit.
– You have the ability to make your monthly mortgage payments.
– You don’t have “hardship” circumstances.
If you’re interested in a conventional loan, it pays to be prepared. You can start by finding out how much property you’re able to afford, and prequalify for a conventional loan, which will give you a good idea of the type of loan, interest rate, and monthly payment you can expect to pay.
Which is Better: FHA or Conventional Loan?
FHA mortgages tend to have higher down payment requirements than conventional loans, and you’ll pay a premium for the FHA’s added backing.
If you’re a first-time homebuyer and need some financial help, then the FHA’s mortgage insurance program might be a good fit for you. But if you’re a repeat homebuyer, have good to excellent credit, and can put a decent amount down upfront, a conventional loan might be your best bet.
Whether you choose FHA or conventional, you’ll find more than one lender in this marketplace. Before you start shopping, be sure to request quotes from several lenders to ensure you’re getting the best deal possible, and be sure to ask any questions you have.
Conclusion
As you can see, there are many different types of home loan programs available to you. But if you’re a first-time home buyer, you can feel secure in the knowledge that there are special loans available, like the FHA and VA loan programs, which provide the support and stability you need to become a homeowner.
While the loans offered by the FHA and VA are popular options, conventional loans still make up the bulk of the home loan market. Not only can conventional loans be used for either your first or repeat home purchase, but these loans are also more flexible than FHA loans, and allow for a wider range of income and debt levels. If you’re ready to take the next step toward home ownership, contact your local lender to learn more about the various home loan programs available to you.
If you’re looking for a local mortgage lender in Colorado Springs? Look no further than Total Lending Concepts! We are a local mortgage lender offering home loan options for just about any situation. Experience a home loan application with a little TLC by getting in touch with us today!
