Conventional Home Loans In Laredo

A conventional mortgage or conventional loan is any home loan not issued or guaranteed by the government. Instead, private lenders such as banks, credit unions, and mortgage firms offer conventional mortgages. However, some conventional mortgages can be secured by two government-sponsored enterprises: the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

Conventional mortgages typically feature a fixed interest rate, meaning that the interest rate does not fluctuate over the life of the loan. The federal government does not guarantee conventional mortgages and loans, so banks and creditors impose higher lending restrictions.

Conventional vs. Conforming Loans

Conforming mortgages or loans are frequently misused to refer to conventional loans. Despite some overlap, the two are separate classes. A mortgage is considered conforming if its underlying terms and conditions satisfy Freddie Mac’s and Fannie Mae’s funding requirements. The Federal Housing Finance Agency sets an annual loan limit for conventional loans. Any mortgage that exceeds the loan limits set by the FHFA is considered a “Non-Conforming Loan.”

In essence, all conforming loans are conventional loans, but not all conventional loans are conforming loans. A prime example is a Jumbo loan. The conforming loan limit for 2022 is $647,200. Any loan that exceeds the loan limit is non-conforming. So while a jumbo loan is considered a conventional loan, not issued or guaranteed by the federal government, it is a non-conforming loan because it exceeds the conforming loan limit.

Conventional-Conforming Loan Requirements

To be eligible for a conventional-conforming loan, borrowers must be specific qualification requirements.

• Credit – A conventional-conforming loans require a credit score of 620 or better. The down payment requirement is 3 – 5% of the sales price contingent upon the borrower’s credit scores. All borrowers must have a 2-year verifiable and stable work history.
• Income – Although there is no minimum or maximum income requirement for conforming loans, there is a DTI eligibility requirement. The back-end debt-to-income ratio of applicants must be no more than 45%.
• Assets – You must provide bank and investment account statements to demonstrate that you have sufficient finances for the down payment, closing costs, and cash reserves on the property. If you get money from a friend or relative for the down payment, you will need gift letters stating that the funds are not loans and are not subject to repayment.

Apply for a Conventional-Conforming Loan in Laredo

Capital Home Mortgage is a direct mortgage lender in Laredo that provides home loans to many clients, including first-time buyers and people considering refinancing their homes. Contact us if you have any questions about conventional home loans, and we’ll be pleased to assist you. Call (956) 307-3422 to get started.