Conventional loans – these are secured by Fannie Mae or Freddie Mac and they’re also responsible for setting the program guidelines. This is one of the most common loan programs people choose when buying a house.
Conventional loans have a First Time Home Buyer option that allows for as little as 3% down. Thetypical down payment for a Conventional loan is 3-5% and with a 20% down payment can avoid PMI (Private Mortgage Insurance) completely.
Conventional loans require a 620 minimum FICO score and allow debt-to-income ratios as high as 50%. They can be more challenging to qualify for than some of the other programs and the interest rates are very credit sensitive, meaning that the lower the credit score the higher your rate will be. PMI is also credit score based, so the lower the scores…
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