Conventional Loans in Colorado

Colorado Conventional Loans

 

What is a Conventional Loan?

A conventional loan is any loan that is not guaranteed by the federal government, such as FHA or VA.  A conventional loan, generally, follows the guidelines of Fannie Mae or Freddie Mac.  Whether you are purchasing a new home, or refinancing a current home, a conventional loan might be the right loan for you, depending on total loan to value, fico score and debt to income ratios.  For a free credit and mortgage analysis contact Tiffany Hughes with KC Mortgage LLC at 303-549-0891

 

Personal facts to consider when qualifying for a conventional loan include:

  • Debt to income ratio: The basis of qualification is 28/36.  This means that the total housing costs (principal, interest, taxes, insurance, mortgage insurance, HOA dues) cannot exceed 28% of your total gross monthly income and total of all monthly debt payments cannot exceed 36% of your total gross monthly income.  These ratios can often be exceeded with other compensating factors and an automated underwritten approval from Fannie Mae or Freddie Mac.  If an automated approval is obtained, then the combined debt ratio can go up to 45%.
  • Credit history and credit scores are very important.  In general a minimum fico score of 620 is required.
  • Downpayment funds of 3% – 20%.  Anything less than 20% requires mortgage insurance.  The monthly mortgage insurance payment amount is determined by fico score, loan amount and loan to value.
  • Ask me about our new 1% down program!!  Minimum 720 credit score required.

 

Conventional Interest Rates:

Interest rates will vary tremendously, depending upon borrower fico score, Loan to Value, the current market at the time of quote.  Call Tiffany Hughes for your individual rate quote today.

 

Qualifying after Bankruptcy:

In order to qualify for a conventional loan, a bankruptcy 7 must be discharged for 4 years and a Bankruptcy 13 must show re-established credit for 2 years.

 

Types of Conventional Loans:

Fixed Rate Loans:  A fixed rate mortgage is the most common and the interest rate stays the same for the entire term of the loan.  The most common conventional terms are 30 year, 20 year, 15 year and 10 year.

 

Adjustable Rate Loans: With a conventional adjustable rate mortgage, also known as an ARM, the initial rate is low and will increase after a set period of time.  The most common adjustable rate mortgage terms are 3 year fixed, 5 year fixed, 7 year fixed and 10 year fixed for the initial fixed term.

 

Maximum Loan Amount: The standard maximum loan amount for a conventional mortgage is $417,000.  However, there are areas of the US that are considered high cost areas and the maximum loan amount can go as high as $729,750.  To find out what the limit is in the county in which your are interested, visit https://www.effaniemae.com/sf/refmaterials/loanlimits/ .

 

Any loan amount above the conventional maximum is considered a Jumbo loan and falls under a whole different set of guidelines are specific to each investor.  For more information regarding JUMBO LOANS and loan limits, contact Tiffany Hughes at 303-549-0891.

NMLS# 197552 Powered by Mac5 Mortgage Inc. 199325

NMLS# 197552
Powered by Mac5 Mortgage Inc. 199325