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Conventional Loan 

What is a conventional loan for a home?

Home loans can have a myriad of characteristics, terms, and rates, and there are over a dozen different types. Most home loans, however, fall into one of two umbrella categories: conventional or non-conventional. Non-conventional loans are often called government or federally insured loans because the government insures these loans—either partially or fully—against default.

Conventional loans will comprise around two-thirds of all home loans issued in the United States. These mortgages are not secured by the government; rather, they are issued by banks, mortgage companies, or other institutions, and commonly sold on a secondary market after closing. This means that the company that closes on the loan may not be the same company for the duration of the loan’s terms. 

Conventional loans are divided into two further classes: conforming or non-conforming. Conforming conventional loans are called such because they adhere to the guidelines established by the two largest investors in conventional loans, Fannie Mae and Freddie Mac. These rules require that borrowers must:

You may be able to qualify for a conventional loan if you have good credit, stable employment history and some money for a down payment, so give Capital Homes Loans  a call today to discuss your options. 

Key Features and Benefits: 

    • Interest rates for conventional loans are some of the lowest available.

    • There are lots of fixed-rate options with terms ranging from 10 to 30 years, but your not limited to 15- and 30-year terms only. 

    • Several ARM programs are available: 3/1, 5/1, 7/1 and 10/1 ARMS along with a 5/5 ARM option. 

    • Appraisal requirements are less strict.

    • You can use a conventional loan to finance a property in a high-cost area.

    • Down payments as low as 3% depending on your loan amount.

 

 

Conventional loans can also be delineated by their rate terms. The two most common types are fixed-rate and adjustable-rate, or ARM. In a fixed-rate mortgage rate, the initial interest rate remains the same for the life of the loan. In an ARM, the interest can fluctuate with the market following an initial fixed-rate period.

Conventional loans have traditionally required a down payment of at least 20%, plus fees and closing costs. (Down payments of less than 20% require the purchase of private mortgage insurance or PMI.) 

To learn more about Conventional loans, read this educational article.

Low down payments for first-time homebuyers or new rates and terms for homeowners with a Freddie Mac loan

The Freddie Mac HomeOneSM mortgage is a low down payment option for qualified first-time homebuyers. It helps hopeful first-time buyers become homeowners, offering relaxed requirements for income levels and geographic locations. HomeOneSM only requires a 3% down payment, and you’re not limited to a traditional, single-family residence.

If you already have a Freddie Mac mortgage, this program offers a no cash-out refinance so you can change the rates and terms of your loan.

Key Features and Benefits: 

    • Low down payments beginning at just 3% of your total loan payment. 

    • You may qualify with a minimum 620 FICO score 

    • Several property types are allowed, including single-family home, condo, modular homes, one unit co-ops, manufactured home* and homes in Planned Unit Developments (PUDs) 

    • No income or geographic restrictions, so you're free to shop for a home within the neighborhood you prefer. 

    • Homebuyer education is required, and help you prepare for the responsibilities of a mortgage. 

An easy and affordable way to pay for home renovations and repairs 

HomeStyle Renovation® can help you finance one or more renovation projects, pay for major repairs, or install a pool. This Fannie Mae program is available for new and existing homes – even new construction. The funds can be used for design updates or even renovating accessory units like garage apartments or guesthouses.

Key Features and Benefits: 

    • You may qualify for renovation fund amounts from $5,000 up to 75% of your home's post-renovation value. 

    • Lower closing costs, since you’re closing a single transaction.

    • Several property types are allowed, including single-family homes, 2-4 unit properties, modular homes, second homes, and homes in Planned Unit Developments (PUDs).

    • Fixed- and adjustable-rate mortgage options. 

Easier qualifying and lower costs make homeownership possible for buyers with low-to-moderate incomes

Home Possible® is a Freddie Mac program designed to help borrowers with low-to-moderate incomes fulfill their dream of owning a home. It offers low down payments and has easier credit score requirements.

This program has other unique guidelines and options. For example, you could qualify for an Affordable Second – a secondary loan from a nonprofit group or a state or county agency, giving you access to more funding.

Key Features and Benefits: 

    • Down payments of as low as 3%.

    • Credit scores as low as 620 are accepted.

    • Fixed-rate financing for easier budgeting.

    • Several property types are allowed, including single-family homes, 2-4 unit properties, modular homes, condominiums and homes in Planned Unit Developments (PUDs).  

    • Temporary buydowns can reduce your starting interest rate for 1-2 years.

    • Co-borrowers who do not live in the home can be included in a one-unit residence. 

    • Homebuyer education is required for first-time buyers. 

    • Down payments as low as 3% depending on your loan amount.

Financing designed to put homeownership within your reach 

HomeReady™ mortgages from Fannie Mae are meant to help borrowers with low-to-moderate incomes buy or refinance a home. These loans reduce the typical down payment and mortgage insurance requirements. They’re also more flexible with co-borrower requirements, including allowing co-borrowers who won’t be living in the home. For example, parents can co-sign a loan to help their adult children get approved.

Key Features and Benefits: 

    • Down payments as low as 3%.

    • Credit scores as low as 620 are accepted.

    • Permits family or friends to co-sign the loan.

    • Several property types are allowed, including single-family homes, 2-4 unit properties, modular homes, condominiums and homes in Planned Unit Developments (PUDs).

    • Properties in high-cost areas may qualify.

    • Homebuyer education is required. 

Government Home Loans

Why you may benefit from an FHA home loan

At Caliber Home Loans, we believe that it’s important to provide a range of lending solutions that fit all types of buyers. That’s why we offer FHA loans – because they can be a smart choice for buyers with limited funds and marginal-to-average credit. The Federal Housing Administration (FHA) was created in 1934 to make it easier to purchase a residence or facility, even for buyers with limited capital and/or imperfect credit.

FHA loans are partially insured by the government, which reduces a lender’s risk and makes qualifying for the loan simpler. That means you may be able to make that purchase investment much sooner than you hoped. Give us a call and we’ll walk you through everything you need to know to find out if this is the right solution for you.

Key Features and Benefits of FHA Home Loans:

    • You may qualify to buy with a low, 3.5% down payment.

    • Credit scores from 620 are allowed for fixed-rate loans.

    • Both fixed-rate and adjustable-rate mortgages (ARMs) available.

    • You may finance a single-family home, 2-4 unit property, modular home, condominium or a Planned Unit Development (PUD) property.

    • Temporary buydowns may reduce your initial interest rate for 1-2 years.

A home loan with extra money for a fixer-upper? 

When searching for a home, sometimes you find one that feels almost right – the perfect size in a great location, with a recently renovated kitchen – but it really needs some exterior cosmetic work. Or you may find one whose walk-up appeal is impeccable – but it still has laminate flooring from the 1960s. 

Perhaps, you aren't searching for a new home, but after watching a home improvement show, you realize your kitchen could use some upgrades.

Fortunately, there’s a home loan for that: an FHA 203(k) Rehab Loan, which includes additional funds for repairs and renovations that are done before move-in.

At Capital Homes Loans, we offer two types of Rehab loans: Limited for minor remodeling and non-structural repairs, and Standard for the bigger jobs. There are benefits to both, and finding the right one for you is critical, so if you’d like to look into a Rehab loan, contact us today.

Key Features and Benefits of FHA 203(k) Loans: 

    • Credit scores from 620 are allowed.

    • You are required to finance at least $5,000 of renovation/repair work.

    • The total loan amount depends on several factors, including which Rehab loan is best for you! 

    • Eligible properties include single-family homes, 2-4 unit properties, modular homes, and Planned Unit Development (PUD) properties.

    • Fixed-rate, 30-year loans keep your monthly budgeting simple.

Already have an FHA loan? Here are a few ways to lower your payments

If you have an FHA loan and the interest rates have fallen since you made your purchase, you may be eligible to refinance at current interest rates and lower your monthly out-of-pocket expenses. Or if you have an Adjustable Rate Mortgage (ARM), you may want to consider converting it into a fixed-rate loan so that you can lock in a lower interest rate and reduce your monthly payments.

Here’s another option to consider: decreasing your loan’s term. If the interest rate has dropped since you got your loan, you may be able to pay the same amount each month but own your home sooner. This can save you a significant amount of money in interest payments. Visit our blog to learn more about refinancing options.

Contact a Capital Homes Loans Consultant to discuss how much you can save by refinancing your FHA loan with Capital.

Key Features and Benefits of FHA Streamline Refinance: 

    • Minimum 620 credit score requirement.

    • A new property appraisal may not be required.

    • You may qualify to finance energy-efficient improvements for your home.

    • To qualify, you’re required to be current on your monthly loan payments

Live the country life with a low-down-payment – or, better yet, no down payment at all

USDA home loans are typically for buyers in rural areas who might not qualify for other traditional loan products. Some buyers may not be familiar with this government-assisted program, but it’s a great one for those that qualify. A USDA loan generally has a low-down-payment – sometimes even zero down payment – and can easier to qualify for when it comes to certain types of purchases.

You don’t have to be a farmer or rancher to qualify fir a USDA home loan. In fact, you don’t even have to live on a farm. Some suburban areas actually qualify for USDA loans, so contact Capital Homes Loans today and see if your home is designated by the US Department of Agriculture for this special product.

And if you do want to be a farmer, that’s ok too.

Key Features and Benefits of USDA Home Loans: 

    • Available for Purchase or Refinances*

    • Available for eligible homebuyers

    • Zero down payment (or very low-down-payment)

    • Competitive fixed rates

    • No cash reserves required

    • Guarantee fee can be financed

    • Closing costs can be paid by Seller

    • You don’t have to be a farmer

How do VA home loans work?

A VA home loan is a mortgage loan that’s issued by private lenders and partially back by the federal government. It helps U.S. veterans, active duty service members, and select widowed military spouses to buy a home.

VA home loans have been around since 1944, but they’ve become increasingly popular in recent years and now account for about 8%* of home purchases. This type of loan is often a good option because requirements are less restrictive to qualify for and require little to no down payment. 

VA home loans can be a great way into homeownership. They differ in some key ways from traditional home loans, so contact us to find out if a VA home loan is the best way for you to buy that dream home. 

Key Features and Benefits of VA Home Loans:

    • Little or no-down-payment 

    • Minimum credit of 620 is required for fixed-rate financing.

    • Borrowers with credit scores from 580 to 619 are subject to stricter guidelines.**

    • Adjustable-rate mortgages (ARMs) require a minimum 620 credit score.

    • High-balance loans are allowed. If you're buying a home in a high-cost area, you may qualify for up to $2.5 million in loan funds.

    • A variety of property types are allowed, including single-family residences, 2-4-unit properties, VA-approved condominiums, manufactured homes and properties in Planned Unit Developments (PUDs).

    • Loans are for primary residences only and can’t be used for investment properties.   

Capital Homes  is proud to support veteran and military home buyers, you can find out more about our initiatives by visiting.

The fast and easy way to refinance your VA mortgage 

A VA IRRRL is a streamlined process that allows you to eliminate a lot of red tape when refinancing your existing VA mortgage. As a current Caliber customer with VA loan, we make the process easier for you and deliver a smoother, faster path to closing than your typical loan process.*

IRRRL stands for Interest Rate Reduction Refinance Loan (pronounced “Earl”) and it’s an easy way to replace your current VA loan with one that has a lower interest rate. You can also use it to shorten your VA mortgage term or to switch from an ARM to a fixed-rate loan. And while most funding fees typically range from 2.14% to 3.3%, an IRRRL comes with a lower VA funding fee of just 0.5%.

Key Features and Benefits of VA Streamline Refinance: 

    • An easy way to lower your monthly payments if the interest rate has decreased since you got your original VA loan. 

    • You can also use an IRRRL to change an adjustable-rate mortgage (ARM) to a fixed-rate loan, shorten your loan’s term or pay for energy-efficient home improvements. 

    • No appraisal is required.

    • No need to verify your income. 

    • Your VA entitlement is re-used, so your amount is not affected. 

    • The VA funding fee is lower than on original VA loans. 

    • Less expensive overall and often has no out-of-pocket costs. 

    • You gotta love a program that’s pronounced “Earl.”

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