ServicesConventional Loans
Conventional Loans in Sunset Valley
Conventional financing is the loan most buyers and refinancing borrowers end up with, because it adapts to a wide range of situations. We go over your credit, income and savings, tell you honestly where you land, and one loan officer carries your file from pre-qualification to the closing table.
Conventional financing, explained plainly
A conventional loan has no backing from the FHA, the VA or the USDA. Most are written to the standards Fannie Mae and Freddie Mac publish, so the guidelines are mature and the terms hold few surprises. You can use one for a primary residence, a second home or a rental, with a fixed rate or an adjustable one.
The strongest candidates usually have income they can document over time and credit in fair shape. Borrowers putting down less than 20 percent pay private mortgage insurance, but unlike the premiums on some government programs, PMI here can be dropped once your equity grows.
One loan officer is your contact the whole way. That person fields your questions, collects your paperwork and keeps the title company and your agent working on the same schedule, so you never have to repeat your story to a new department.
Our part of a conventional loan
A clear read on your numbers
Income, debts, savings and credit get reviewed as a whole, and you hear a realistic price range in plain words. If something should be addressed before you shop, we tell you up front.
Weighing down payment against PMI
We run several down payment amounts and show how each one changes your monthly cost and mortgage insurance. Holding back some cash as a cushion can be the smarter move, and we show both paths next to each other.
Rate versus points, side by side
Paying points lowers the rate; skipping them keeps cash in your pocket. We work out how many months it takes to recover the cost of points, so the choice fits how long you plan to stay.
One person for your paperwork
Your pay stubs, W-2s, tax returns and bank statements all go to your loan officer. We check them before underwriting sees them, which turns up gaps early instead of days before closing.
Keeping closing on schedule
We stay in touch with your agent, the appraiser and the title company so every date holds. Updates come from one person, not a string of strangers.
When conventional financing makes sense
- Your pay is steady and well documented
- Salaried and hourly borrowers with two years in their line of work tend to clear conventional underwriting without much friction. If you are self-employed and your returns show less than you really earn, look at our Bank Statement Loans page first.
- You have saved a solid down payment
- Bring 20 percent and PMI drops out entirely. With less than that, borrowers with good credit often still pay less over the long run than they would on an FHA loan.
- The property is a second home or rental
- Vacation places and investment properties can be financed conventionally, which several government programs will not allow.
- You want PMI with an end date
- Conventional mortgage insurance can be cancelled as the balance shrinks and the property appreciates. Many borrowers refinance out of FHA loans for exactly this reason.
- Your loan stays within conforming limits
- Most purchases around Sunset Valley come in under the conforming limit, and staying there usually means sharper pricing than a jumbo loan.
How a conventional loan moves forward
- 1
A first conversation by phone
We talk about your goals, your timeline and the broad outline of your finances. By the end of the call you know whether conventional financing suits you and which documents to start pulling together.
- 2
Pre-qualification, then pre-approval
With your okay we review credit and confirm income, then issue a pre-approval letter that tells sellers you are ready to buy.
- 3
Application and underwriting
Once your offer is accepted, we complete the application and schedule the appraisal. Your file then goes to an underwriter for review. Any conditions they raise come to you through your loan officer, along with a plain explanation of what is needed and why.
- 4
Locking the rate and reviewing terms
We help you choose when to lock, then go over the Closing Disclosure with you line by line before you sign anything.
- 5
Closing day
You sign at the title company while we remain on hand for any final question. After closing, the same loan officer is still your contact.
What moves your conventional rate and closing costs
Conventional pricing is built from your own credit, savings and property, so no two files come out the same. We explain each factor as it applies to you and put the tradeoffs in writing early. When the Closing Disclosure reaches you, nothing on it should be new.
- Credit score
- Higher scores earn better rate pricing and smaller PMI premiums. Even a modest bump before you apply can change the figures in your favor.
- Down payment and loan-to-value
- More equity at the start means fewer risk adjustments on the rate and less mortgage insurance, or none at all. Put down under 20 percent and PMI becomes part of the monthly payment.
- Occupancy and property type
- A home you live in yourself gets the most favorable terms. A vacation property, a rental, a condo or a building with two to four units each adds its own adjustment to the rate.
- Points or lender credits
- Bringing more cash to closing can lower the rate. Taking a slightly higher rate can cover part of your closing costs instead. The better choice depends on how many years you expect to keep the loan.
- Rate lock length
- A longer lock guards against a slow closing but may cost a little more. We match the lock period to the closing date written in your contract.
Common questions about conventional financing
- What is the smallest down payment a conventional loan allows?
- Eligible first-time buyers can put as little as 3 percent down on certain conventional programs. Plenty of other borrowers begin around 5 percent. Reach 20 percent and PMI drops off the table. We show you the monthly payment at each amount so the decision rests on real numbers.
- What credit score do I need to qualify?
- Most conventional loans start at a 620 score. Pricing improves in tiers as the score rises, so we will give you a straight answer on whether a few months of credit work would be worth the wait.
- How do I get rid of private mortgage insurance?
- When your balance reaches 80 percent of the original value, you can request that PMI be cancelled. As long as payments are current, it falls away automatically at 78 percent. A new appraisal showing the property has gained value can sometimes move that date up.
- Is conventional or FHA the better fit for me?
- With good credit and at least 5 percent down, conventional usually comes out cheaper over the life of the loan. A lower score or a smaller down payment can make an FHA loan easier to get approved. We price both for you so you compare actual figures, not guesses.
- Can a relative give me money for the down payment?
- Yes, on a primary residence. The relative signs a gift letter, and the transfer needs a clear paper trail from their account to yours. We walk you through the exact documents before any funds move.
Find out where you stand
A short conversation with your loan officer tells you what you qualify for and what your next step looks like. From there, the same person stays with you through closing.