One of the most common types of home loans is a conventional mortgage. Conventional mortgages may include fixed rates or adjustable rates. You can choose a term for your loan that fits with your financial situation and helps you achieve your goals.
What is a Conventional Home Loan?
A conventional mortgage is any home loan that does not have the backing of a government agency, and which a private mortgage company originates.
A conforming conventional mortgage is what you are probably thinking of when you consider conventional loans.
This type of loan conforms to the Fannie Mae and Freddie Mac conforming loan limits. That means they are eligible for purchase by these government-sponsored enterprises. Fannie Mae and Freddie Mac are not government agencies, but they are subject to oversight by the Federal Housing Administration (FHA). As a result, they have strict standards.
A conventional loan that does not conform to the Fannie Mae and Freddie Mac limits is a jumbo loan. That means that Fannie Mae and Freddie Mac are not able to purchase these types of mortgages. Instead, private investors purchase them from lenders.
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California
To purchase a home with a conventional conforming loan, you cannot borrow more than the conforming loan limits permit.
The conforming loan limits depend on your county. These are the limits in most counties throughout the US:
1 UNIT
$647,200
2 UNITS
$828,700
3 UNITS
$1,001,650
4 UNITS
$1,244,850
In counties with higher costs of housing, the conforming loan limits can also be higher. This is true for a number of counties in California.
Rancho Cordova, where Mortgage Consultants Group is based, is in Sacramento County, CA. Here are the conforming loan limits for Sacramento County:
1 UNIT
$675,050
2 UNITS
$864,200
3 UNITS
$1,044,600
4 UNITS
$1,298,200
Do You Qualify for a Conventional
Conforming Home Loan?
Approval for a conventional conforming loan depends on:
- Your credit score
- Your debt-to-income (DTI) ratio
- Your employment history and status
- Your income
- Your down payment ability.
Applying for a conventional loan with a strong borrower profile can help you qualify for affordable rates.
The down payment amount you qualify for will also depend on the factors above. Keep in mind that even if you qualify for a low down payment, you might want to make a larger one. It all comes down to your financial needs and goals.
If you need recommendations for how you can raise your credit score or lower your DTI ratio before applying for a mortgage, please let us know.
Loan Terms and Interest Rate Formats
for Conventional Loans
When you apply for a conventional loan, you will have the opportunity to choose a suitable loan term and interest rate format.
The term of your mortgage is its length. You can choose a 10-year term, a 15-year term, a 20-year term, a 25-year term or a 30-year term.
The format for your interest rate can be fixed or adjustable. If you choose an adjustable rate, you will have a low introductory rate for the first few years, and then the rate will adjust based on market rates. If you pick a fixed rate, then your interest rate will be static over the lifetime of your home loan.
Apply for a Conventional Loan in Rancho
Cordova or Beyond
Not sure whether to apply for a conforming conventional loan or a jumbo loan? Have questions about how to raise your qualifications before you apply for a mortgage? Please contact us today at (916) 669-1682 to schedule your consultation. We work with customers in Rancho Cordova, Gold River and throughout Sacramento, El Dorado, Placer, San Joaquin and Stanislaus Counties. We can also serve you elsewhere in California.
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Most people don’t... Find out in 10 minutes.
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