Some homebuyers believe that conventional mortgages are the only type of home loan. Still others overlook them entirely because they think they will not qualify. Regardless, there are a lot of myths about conventional mortgages that quite a few borrowers still believe. Let’s dispel a few of those now by going over a few things you may not know about conventional home loans.
Conventional Home Loans
- Conventional mortgages and conforming mortgage are not the same. A lot of people use the term “conventional” when they mean “conforming” and vice versa when talking about home loans. Here is what these terms really mean:
- Conventional loans are loans that are not backed by a government agency.
- Conforming loans fit within the Fannie Mae and Freddie Mac conforming loan limits. Conventional loans include conforming loans and non-conforming “jumbo” loans.
- Low down payments are possible with conventional home loans. One of the most common myths about conventional mortgages is that you cannot qualify for one without making a 20% down payment. But this is not necessarily true. The down payment amount for a conventional mortgage can actually be very low. It all depends on your borrower profile. So, if you have been planning on applying for an FHA loan by default, you might want to consider a conventional mortgage as well. Each product has its pros and cons. During your consultation, I can help you figure out which is ideal for your situation.
- You can use gift money. Some people believe that you are not allowed to use gift funds when you get a conventional loan. This is another myth. You can use gift money when you take out this type of mortgage. You also can use down payment assistance if you qualify for it. So, that is yet another way in which conventional mortgages are more widely accessible than many borrowers assume.
- Conventional conforming loan limits are higher in high-cost areas. If you have looked up the conventional conforming loan limits, perhaps you only found the limits that apply in most counties in the US. If so, you might be assuming you need a jumbo loan to buy a home in San Diego. But San Diego is classified as a high-cost area. So, the conforming loan limits are higher for this county. Make sure you look up the conforming loan limits for San Diego County itself at the time you are applying. You may be surprised. Sometimes, you might have the option of buying a home with a conforming loan that you would need to purchase with a jumbo loan if it were in a different county.
- You do not need a perfect credit score. Borrowers sometimes think if their credit scores are not perfect, then they cannot apply for a conventional mortgage. But your credit score does not need to be pristine in order to qualify for a conventional home loan. This is especially true if you are able to make a larger down payment.
Buy a Home in San Diego with a Conventional Mortgage
Now that you know more about conventional mortgages, you may have a better idea whether this type of mortgage is right for you. During your consultation, you can ask your questions about conventional mortgages. When you tell me about your situation with respect to your credit score, down payment ability and budget, I can help you figure out whether a conventional home loan is suitable. If you are ready to get started, please give me a call at (619) 857-7191 to schedule your consult.
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