Conventional Mortgage
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Summary
A Conventional loan is not guaranteed or insured by any government agency. Instead, they have the implicit backing of the government through Freddie Mac and Fannie Mae, the two agencies that help standardize mortgage lending in the United States.
Freddie Mac and Fannie Mae are the two biggest purchasers of conventional loans, and so they make the rules when it comes to qualification requirements. Roughly 65% of loans on the market are conventional loans.
Features
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Flexible terms between 10 through 30 years. Adjustable rate options also available.
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Flexible Mortgage Insurance payment options for loans with less than 20% down: Borrower-Paid, Lender-Paid, Split, or Financed. Mortgage insurance automatically cancels when there is enough equity.
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All occupancy types are allowed, from Primary Residence, Second Home, and Investment property purchase and refinance transactions.
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Refinances to change the rate and/or term or to pull cash out of the equity of your home are available.
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Non-occupant co-borrowers eligible.
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3% Down Payment option available for first time home buyers.
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Multi-unit properties can qualify. Duplexes, Triplexes, and Quadplexes can be purchased and refinanced with a Conventional loan.
Requirements
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Conventional loan limits are set by FHFA. Hawaii is a high-cost area and we have higher loan limits than most of the country. Starting in 2021, all counties of Hawaii have a conforming loan limit as follows:
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1-Unit Property: $822,375
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2-Unit Property: $1,053,000
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3-Unit Property: $1,272,750
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4-Unit Property: $1,581,750
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Condominiums must be warrantable. Full Review or Limited Review types available depending on occupancy and Loan to Value ratio.
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Minimum FICO score of 620.
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Debt to Income ratio limits vary but generally cannot exceed 45% - 50%.