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Conventional Mortgage Programs
Conventional home loans are the most common loans offered. They offer the widest combination of solutions for our clients. Down payments range from 3%-20%+.
,Are you dreaming of owning your own home? Looking for a flexible and reliable financing option? Look no further than conventional loans. Conventional loans have long been a popular choice for homebuyers, providing a range of benefits and opportunities. We will explore everything you need to know about conventional loans and how they can make your dreams of homeownership a reality.
What are Conventional Loans?
Conventional loans are mortgage loans that are not insured or guaranteed by any government agency. Unlike FHA loans or VA loans, conventional loans are backed solely by private lenders and investors. The main advantage of conventional loans is their flexibility, offering a wide range of loan terms, interest rates, and down payment options.
Key Benefits of Conventional Loans:
1. Flexible Loan Terms: Conventional loans offer various repayment terms, typically ranging from 10 to 30 years. This flexibility allows you to choose a term that fits your financial goals, whether you prefer a shorter term with higher monthly payments or a longer term with lower monthly payments.
2. Competitive Interest Rates: Unlike some government-backed loans, conventional loans often come with competitive interest rates. The interest rate you qualify for will depend on factors such as your credit score, loan term, and down payment amount. A lower interest rate can save you thousands of dollars over the life of your loan.
3. Higher Loan Limits: Conventional loans have higher loan limits compared to FHA loans, which means you can borrow more money to finance your dream home. Loan limits may vary based on your location and can be easily checked with your lender.
4. No Mortgage Insurance Premiums: One significant advantage of conventional loans is the ability to avoid mortgage insurance premiums (MIP) if you make a down payment of 20% or more of the home’s purchase price. This can save you a substantial amount of money over time, unlike FHA loans where mortgage insurance is required regardless of the down payment amount.
5. Option to Cancel Private Mortgage Insurance (PMI): If your down payment is less than 20%, you may be required to pay private mortgage insurance. However, the advantage of conventional loans is that once you have built up enough equity in your home or your loan balance reaches 78% of the original purchase price, you can request the cancellation of PMI, potentially reducing your monthly mortgage payments.
How to Qualify for a Conventional Loan:
To qualify for a conventional loan, there are several key factors that lenders consider:
1. Credit Score: Lenders generally require a good credit score for conventional loans. Although the specific credit score requirements may vary, a score of 620 or higher is typically recommended. A higher credit score can also help you secure a more favorable interest rate.
2. Debt-to-Income Ratio: Lenders assess your debt-to-income ratio (DTI) by comparing your monthly debt obligations to your gross monthly income. Typically, a DTI ratio of 36% or lower is preferred, but qualified borrowers may go up to 50%. This includes your potential mortgage payment along with any other outstanding debts.
3. Down Payment: While it is possible to obtain a conventional loan with a down payment as low as 3%, a higher down payment can help you secure better terms and potentially avoid mortgage insurance premiums. A down payment of 20% or more eliminates the need for mortgage insurance altogether.
4. Employment and Income Stability: Lenders will evaluate your employment history and income stability to ensure you have the financial capability to repay the loan. Generally, lenders prefer to see a consistent employment history and steady income for the past two years or more.
5. Property Appraisal: As with any mortgage loan, the property you intend to purchase will need to undergo an appraisal to determine its market value. The appraisal is typically conducted by a licensed appraiser and paid for by the borrower.
Conventional loans offer a flexible and customizable financing option for homebuyers. With competitive interest rates, higher loan limits, and the potential to avoid mortgage insurance premiums, they are a popular choice for those looking to achieve homeownership. Whether you are a first-time homebuyer or a seasoned homeowner, conventional loans provide the tools necessary to make your dreams a reality. Contact Capital City Mortgage today to explore your options and take that important step towards owning your dream home.
Local Loan Options
Nebraska Mortgage Options
Nebraska residents have several mortgage options available to them. Conventional mortgages, with low down payments. FHA loans, require a smaller down payment and are generally easier to qualify for. VA loans are available to eligible active-duty military personnel and veterans. USDA loans help borrowers in rural areas with low to moderate-income purchase homes. Additionally, Nebraska residents may be eligible for various state and local first-time homebuyer programs and down payment assistance programs.
Residents of Lincoln, NE can choose from a variety of mortgage options. Traditional mortgages are available with low down payments. An FHA loan is also an option, requires a lower down payment, and is generally easier to qualify for. VA loans are available to eligible active-duty military and veterans. USDA loans help rural low- to moderate-income home buyers. Additionally, Lincoln, Nebraska residents may be eligible for several state and local first-time buyer and down payment assistance programs.
Omaha Mortgage Options
Residents of Omaha, NE can choose from a variety of mortgage options. Traditional mortgages are available with low down payments. FHA loans are also an option, require a lower down payment, and are generally easier to qualify for. VA loans are available to eligible active-duty military and veterans. USDA loans help rural low- to moderate-income homebuyers. In addition, Lincoln, Nebraska residents may be eligible for several state and local first-time buyer and down payment assistance programs.