Conventional Mortgages
Conventional Mortgages in Florida
Conventional mortgages are often regarded as a favored option among a wide range of homebuyers. Unlike government-backed loans, these types of mortgages are not insured or guaranteed by any governmental agency, which makes them an appealing choice for individuals who possess good credit scores and a reliable income. Typically, these mortgages require a down payment that can vary between 3% to 20% of the home's purchase price, depending on the specific lender and the type of loan being sought. Additionally, conventional mortgages provide borrowers with the flexibility of either fixed or adjustable interest rates, which can be tailored to suit individual financial circumstances. This adaptability makes homeownership a more attainable goal for many aspiring homeowners.
What are Conventional Mortgage Requirements?
To obtain a conventional mortgage, you will need to provide several key documents. These include proof of income and assets, employment verification, a driver’s license or state ID card, and a valid social security number. Having these documents ready can help streamline the application process and improve your chances of approval
The down payment requirements can differ depending on your personal situation and the type of loan or property you are considering. First-time home buyers in Los Angeles may qualify for a conventional mortgage with a down payment as low as 3% through various financial assistance programs. For those who have purchased a home before, the down payment requirement is typically %, while second-time home buyers may need to put down 10%. If you opt for an adjustable rate mortgage, a minimum down payment of 5% is necessary. For jumbo loans, expect down payment requirements to range from 10% to 40%. Additionally, if you are purchasing a property that isn’t a single-family home, a 15% down payment may be needed.
Different Types of Conventional Mortgages:
1. **Conforming** – These loans meet the standards set by Fannie Mae and Freddie Mac, two home mortgage companies established by the U.S Congress to enhance the affordability and stability of the mortgage market providing liquidity to numerous loans and financial institutions.
2. **Nonconforming** – Loans like jumbo loans fall into this category, as they do not meet the criteria established by Fannie Mae and Freddie Mac. Jumbo loans often require a higher credit score compared conforming loans.
3. **Fixed Rate** – With this type of mortgage, the interest rate remains constant throughout the entire loan term.
4. **Adjustable Rate** – Also known as hybrid ARMs, these loans have interest rates that can change after an initial fixed-rate period.
5. **Amortized – This mortgage type offers a predetermined monthly payment throughout the repayment period, without any balloon payments, and can feature either fixed or adjustable rates.
6. **Low Down Payment** – These loans provide more flexibility, allowing borrowers to enter homeownership with a smaller upfront cost.
With conventional financing, you can purchase a variety of homes, including single-family homes, condos, investment properties, townhomes lofts, and even second vacation homes. This flexibility makes conventional loans a popular choice for many homebuyers looking to invest in different types of real estate. Whether you're seeking a primary residence or a property for investment, conventional loans provide a range of options to suit your needs.
Documents Needed for Conventional Loans
Your loan approval depends 100% on the documentation that you provide at the time of application. You will need to give accurate information on:
Employment
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Complete Income Tax Returns for past 2-years
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W-2 & 1099 Statements for past 2-yearsPay-Check Stubs for past 2-months
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Self-Employed Income Tax Returns and YTD Profit & Loss Statements for past 3-years for self-employed borrowers
Savings
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Complete bank statements for all accounts for past 3-months
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Recent account statements for retirement, 401k, Mutual Funds, Money Market, Stocks, etc.
Credit
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Recent bills & statements indicating account numbers and minimum payments
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Landlord's name, address, telephone number, or 12- months cancelled rent checks
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Recent utility bills to supplement thin credit
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Bankruptcy & Discharge Papers if applicable12-months cancelled checks written by someone you co-signed for to get a mortgage, car, or credit card, this indicates that you are not the one making the payments.
Personal
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Drivers LicenseSocial Security Card
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Any Divorce, Palimony or Alimony or Child Support papers
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Green Card or Work Permit if applicable
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Any homeownership papers
Refinancing or Own Rental Property
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Note & Deed from any Current LoanProperty Tax Bill
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Hazard Homeowners Insurance PolicyA Payment Coupon for Current Mortgage
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Rental Agreements for a Multi-Unit Property