CONVENTIONAL CONFORMING

The conventional conforming loan is the most common type of mortgage. In 2024, these loans continue to be a favored choice for a wide array of borrowers, including first-time homebuyers and investors. They are distinguished by their adaptability, making them suitable for purchasing various property types, ranging from primary residences, secondary homes and investment properties.

Program Features:

  • Flexible Down Payment and PMI Options: The down payment requirement ranges between 3% and 5%. Private Mortgage Insurance (PMI) is necessary for down payments less than 20%, but it can be removed upon reaching 20% equity.
  • Credit Score and DTI Requirements: A minimum credit score of 620 is typically required, along with a debt-to-income ratio below 45% in most cases. However, in certain instances and with compensating factors, our lenders can accept a debt-to-income ratio up to 50%.
  • Eligible Property Types: These loans are applicable for single-family homes, PUDs, condominiums, 2-4 unit properties, some co-op properties, and manufactured homes. Specific guidelines are set for properties like condominiums; a budget and condo questionnaire are required from the homeowners’ association.
  • Income and Employment Verification: Applicants need to show at least two years of stable income with the same employer or in the same field, with various types of income being considered. Self-employed borrowers need at least 2 years of self-employment history as well. However, if one can prove prior employment history in the same line of work, lenders might accept only one year of tax returns.
  • Appraisals: Conventional appraisals are known for being more lenient regarding property conditions compared to other loan types.
  • Updated Loan Limits: In 2024, the baseline loan limit for a single-family home has been raised to $766,550, reflecting the increase in average U.S. home prices. In high-cost areas, this limit can extend up to $1,149,825, with even higher limits in Alaska, Hawaii, Guam, and the U.S. Virgin Islands. Loan limits are higher in these areas.
  • Role of Fannie Mae and Freddie Mac: These entities set the standards for conforming loans, insuring mortgages issued by lenders and acting as secondary market makers. This ensures a consistent and reliable home loan framework.