Conventional Home Loans in California
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The Benefits of a Conventional Loan
If you have a great credit score and money for a substantial down payment, then a conventional mortgage loan is perfect for you. The benefits of a conventional loan are numerous:
Types of Conventional Loans
A conventional loan is a mortgage that follows the lending rules set by Federal Home Loan Mortgage Corporation (Freddie Mac) and Federal National Mortgage Association (Fannie Mae) and is not backed by any government agency.
Conventional loans that follow Fannie Mae and Freddie Mac guidelines are called conforming. These type of loans have loan limits. Conventional mortgages usually have the best loan terms and the best interest rates which result in a lower monthly payment.
There is a variety of options to purchase a house with a conventional loan. You can avoid mortgage insurance if you put down 20%. There is also a chance to remove the insurance once you have reached an 80% LTV (Loan-to-Value). You can buy primary, secondary and investment properties with this loan.
You may refinance into a conventional loan from other types of loans. This way you will be able to secure better terms and rates in your current situation. To avoid mortgage insurance, you need to have 80% LTV.
Conventional Loan Properties
Conventional Loan Requirements
Good Credit Score
Prove a Stable Income
Make a Down Payment
How to Apply for a Conventional Loan
To apply for a conventional loan you need to find a suitable lender, collect a package of documents and submit an application. You will need to provide these documents:
- 2 most recent years of tax returns;
- 2 most recent years of W2’s forms;
- 2 most recent bank statements;
- employment history for the past two years;
- Social Security number and current address.