Minnesota residents that want to upgrade into a larger home or may be buying a home for the first time may be interested in a conforming mortgage. Many people may be wondering what exactly is a conforming loan.
To clear things up a bit more activerain.com says this:
“Loans fall into two main categories: Government and Conventional. Government loans include FHA Loans (Federal Housing Administration), VA Loans (department of Veterans Affairs) and USDA Rural Development (United States Department of Agriculture). If a loan is not one of the former three, VA, FHA, or USDA, then it is a Conventional Loan. Conventional loans are offered by big banks, credit unions, FNMA (Fannie Mae), FHLMC (Freddie Mac), Mortgage Banks, etc. A loan is first defined as either Government or Conventional.
Conforming loans are loans that meet the Underwriting guidelines and requirements of FNMA (Fannie Mae) and FHLMC (Freddie Mac). Simple as that. If the Fannie/Freddie Shoe fits, it’s a conforming loan. The next qualifier for conforming is the Conforming loan limit. This is $417,000 nationwide.”
One of the primary advantages of a conforming mortgage with a 20% down payment on your home is you can avoid having to get private mortgage insurance, also known as PMI. PMI can really add up, and not having it on your mortgage can save you hundreds a month and thousands a year. If you don’t have 20% of the purchase price of the home you want, you can still qualify for a conforming mortgage with adding small monthly mortgage insurance to your loan payment for a short time until you reach 80% loan to value (LTV) or automatically drops off your payment at 78% LTV.
To be able to qualify for a conforming mortgage you will need to know where you stand with your credit score and your past financial obligations. You must not have had a foreclosure or short sale within the past 5 years and bankruptcies within the past 4 years. You must also have:
- A Minimum Credit Score of 620
- A Minimum Down Payment of 5%
- A Debt to Income Ratio of Under 45%
When you fill out the contact form to the right, you are contacting me, a local Minnesota mortgage broker with experience in issuing this type of loan and access to many different mortgage lenders that can tailor to your scenario. It will be my pleasure to find you the best lender to provide you with the best mortgage that fits your needs for your Minnesota home loan.
If you have any questions about loans, or the home buying process I encourage you to fill out the contact form so that we can talk about your needs, and how I can help you get the best loan for your situation. I will get you all the information you need to make the best decisions and to get you the lowest rates. In addition to the contact form to the right you can also reach me at work (763)-400-7537 or on my mobile at (952)-807-8532.