Conventional Loans In Seattle

Conventional home loans in Seattle are mortgages that the federal government does not guarantee. The private sector typically originates these loans. This distinguishes them from mortgage loans backed by the government, such as FHA and VA loans.

Conventional loans come in two types: conforming and non-conforming.

• Conforming Conventional Loans

Conforming loans adhere to the guidelines established by government-sponsored enterprises such as Fannie Mae and Freddie Mac. The Federal Housing Finance Agency (FHFA) typically sets the maximum loan amount. Due to their generally reduced interest rates, borrowers frequently prefer conforming loans.

• Non-Conforming Conventional Loans

These loans do not adhere to government-established guidelines, typically because they exceed the FHFA’s loan limit. Non-conforming loans usually carry higher interest rates than conforming loans, as they pose a greater risk to lenders. The most prevalent non-conforming loan is the jumbo mortgage loan, which exceeds conforming loan limits.

Both types of conventional loans are made available by private lenders such as banks, credit unions, and mortgage companies, and they frequently have stricter qualification requirements than government-backed loans.

Eligibility Requirements of Conventional Conforming Loans

Conventional conforming loans are mortgage loans that comply with Fannie Mae and Freddie Mac’s underwriting requirements and do not exceed the conforming loan limit1. These guidelines cover a variety of topics, as detailed below:

• Loan Limits

The loan amount must be within the conforming loan limits set by the Federal Housing Finance Agency (FHFA). The conforming loan limits in Seattle, King County, for 2023 are as follows: $977,500 for a single-unit property, $1,251,400 for a duplex, $1,512,650 for a triplex, and $1,879,850 for a four-plex, respectively.

• Loan-to-Value (LTV) Ratio

This is the proportion of the home’s value. A lower LTV generally indicates the borrower has made a higher down payment. Conforming loans typically have a maximum LTV of 95%. Borrowers with excellent credit may be eligible for a 97% LTV.

• Debt-to-Income (DTI) Ratio

The DTI ratio is the proportion of a consumer’s monthly total income spent on debt payments. This ratio assists lenders in determining a borrower’s capacity to manage monthly payments and repay debts. Conforming loans may not exceed a DTI ratio of 45%.

• Credit Score and History

Borrowers should have high credit scores and a history of timely debt repayment. While the minimum credit score varies from lender to lender, a high credit score is generally advantageous because it indicates a lower risk for the lender. A credit score of 620 is required to qualify for a conventional loan.

• Documentation Requirements

These may contain, among other things, proof of income, employment verification, and financial documents. The goal is to determine the borrower’s ability to repay the loan.

Apply for a Conventional Loan with Capital Home Mortgage

Choosing Capital Home Mortgage for a conventional loan provides Seattle homebuyers numerous advantages. We offer low interest rates and a wide range of conventional loan products to meet various financial needs, including low-down installment options as low as 3%. Our ability to deliver quick closing procedures decreases the time needed to process a home loan, which is critical in Seattle’s hot property market. Capital Home Mortgage’s knowledge and experience in the Seattle real estate market also assure individualized, smooth service, helping purchasers navigate the loan process comfortably and confidently.

Call (253) 528-4417 to speak with one of our Seattle Home Loan Specialists.