Have great credit? A Conventional loan will get you the lowest payment.
Minimum Down Payment: 3-5%, depending on program
Minimum Credit Score: 620
Maximum Loan Amount: $726,200 in Ohio (higher in high cost markets)
Maximum Debt Ratio: 50% (some programs are lower)
Conventional mortgages, also called conforming mortgages, are any mortgage that qualify for any programs offered by Fannie Mae and Freddie Mac. This includes the standard agency programs, and specialty programs like Home Ready, Home Possible and Homestyle.
The minimum score for a Conventional mortgage is 620. Most mortgage lenders, including PRMG, pull a tri merge report and use the middle score. This score is a different type of score than the one you will see with Credit Karma and may vary as much as 30 points.
The Chapter 7 bankruptcy needs to be discharged at least 4 years to qualify for Conventional mortgage financing.
A Chapter 13 bankruptcy needs to be discharged at least 2 years.
There is a 7 year waiting period for a foreclosure. This is based on the date that the lender takes possession of your property, not the date of the Sheriff’s Sale. Sometimes, this can be weeks or months after the actual Sheriff’s Sale. Deed in Lieu, where you just deed the property to the mortgage company falls under this same requirement.
Depending on the program, you can go as high as a 50% debt ratio.
It’s typically 5% but on some programs like Home Ready you can do 3% down
If you put down less than 20% then you will need to pay for mortgage insurance. This will be included in your monthly payment and you will know what this amount is when you apply. The PMI gets removed when you get to 20% equity in your home.
Some programs like Home Ready allow gift funds.
Some programs like Home Ready and Home Possible allow a non occupying co borrower. This can help if the income is too low for the borrower to qualify on their own.
Student loans are one area where Fannie Mae and Freddie Mac differ. If you have student loan debt, a Fannie Mae loan product like Home Ready is the way to go since they will used your income based payment for debt ratio purposes.
Depends on the program. If you are using Home Ready or Home Possible, there is an income limit, which is $65,700 in most areas near Dayton and $78,300 in most parts of Cincinnati. Note, some areas are considered low income and are exempt from this limit. Click here to check the Home Ready map for more info
Fannie Mae uses Desktop Underwriter (DU) and Freddie Mac uses a program called Loan Prospector Advisor (LPA). These programs take into account the credit score, the debt ratio and savings (called reserves in the lending industry) to make a yes or no credit decision. In some cases, manual underwriting can be utilized when special circumstances exist that DU or LPA did not pick up the full borrower picture.
In the Dayton metro area and most of Ohio, the Conventional maximum loan amount is $453,100. However, you can always put more money down if you are buying a more expensive property and want to use Conventional mortgage financing. We also offer other Jumbo mortgage programs to borrowers that are over the loan limit. Please reach out to discuss your options.
Overlays are additional credit requirements over and above what Fannie Mae and Freddie Mac require. We have very few overlays so you can get approved quickly.