Conventional Loans
Conventional Loans are the most common and widely recognized type of mortgage. They serve as a standard choice for many individuals embarking on their mortgage journey. With a minimum down payment requirement of 5% (3% for first-time homebuyers), these loans offer a maximum loan amount of $1,089,300 in Hawaii in 2023. Seller concessions can reach up to 2-9% of the sales price, providing additional flexibility in the home-buying process. Private Mortgage Insurance (PMI) is necessary when the Loan-to-Value (LTV) ratio exceeds 80%, meaning when the mortgage amount surpasses 80% of the property's value. While this information may initially seem complex, the process itself is quite conventional and straightforward.
Who Is Eligible For Conventional Loans?
A Conventional Loan will appeal to borrowers with a strong credit rating (at least 620 to qualify, with a score above 740 to help you get the best rate) and can put a down payment of 3% or more. They’re not backed by a government agency, and the loan limits are set by the FHFA (Federal Housing Finance Administration). The down payment and income requirements for a conventional loan are often set by the lender, and borrowers typically need to provide detailed of their income, employment history, and assets.
Features:
✔ Fewer Fees:
Unlike other loans, such as FHA Loans, Conventional Loans don’t have program-specific fees.
✔ More lending options:
Conventional Loans have flexibility. You can start with a “30-year fixed, 15-year, 20-year” or even an adjustable rate?
✔ More property types:
You have more options for homes you’re looking at, such as a second home or property you’re looking at as an investment.
