A conventional loan is not insured or secured by a government agency such as the Federal Housing Administration (FHA), or the US Department of Veterans Affairs (VA). Instead, it is guaranteed through two government-sponsored entities; the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Conventional financing allows down payments as low as 3%*, depending on loan type.
Conventional Loan Programs
CONVENTIONAL LOANS
The peace of mind of a conventional loan is the
preferred choice for most borrowers
There are many different home loan programs for you to choose from, one of the most popular programs is a conventional loan. Conventional guidelines are set by Fannie Mae and Freddie Mac. These government sponsored enterprises buy and sell conventional loans, as well as setting the maximum loan amount and requirements for borrowers. When loans meet the maximum loan limit set by Fannie Mae and Freddie Mac, they are called conforming loans, since they conform to those limits. The current loan limits in the United States must not go over $510,400. In certain high-cost counties, higher loan limits are allowed. For example, Los Angeles and Orange County have a high balance loan limit of $765,600. This varies from county to county.
Conventional interest rates are slightly higher than the government backed loans, like FHA and VA. One of the benefits of a conventional loan financed with mortgage insurance is the flexibility in removing the mortgage insurance down the road, unlike FHA requirements. Also when looking to finance a condominium or townhouse, there’s no approval required from Fannie Mae or Freddie Mac unlike government loans; they require either FHA or VA condominium / homeowners association approval. This increases the inventory availability to you when looking for this type of property.
Fannie Mae and Freddie Mac both offer minimal to low down payment options. The two solutions offered are Home Ready by Fannie Mae and Home Possible by Freddie Mac. For more details click here (link to Loan Solutions Page.)
As a Direct Lender with the ability to broker, CLS Financial has access to a variety of loan options. This means we can be more creative when it comes to finding you the perfect conventional loan terms. Fixed rate and Adjustable Rate Mortgages (ARM) are available. Our goal is to provide Peace of Mind to our clients throughout their journey of home ownership and build the trust needed to become your personal loan specialists for life. Reach out to CLS today to find the right loan option for you.
*Please visit our Disclosures page for more details for all loan types.