Down Payments Explained

Roughly two out of every three mortgage loans are conventional mortgages; this is a type of mortgage that is not insured or guaranteed by the government. The loan is backed by private lenders, usually through a bank, and the insurance is generally paid by the borrower. A conventional loan is the most popular home loan option because of the flexibility it offers; however, it is a riskier choice because it is not insured by the federal government. This also makes it more difficult to qualify for a conventional loan, even in normal times. The COVID-19 pandemic has made it even more difficult to qualify for a conventional mortgage, which is why it's important to explore all of your options. Requirements to Qualify for a Conventional Loan In order to qualify for a conventional mortgage loan, borrowers must meet the following requirements: A minimum credit score of 620 A minimum down payment of 3% for first time homebuyers and 5% for repeat buyers A maximum possible debt to income ratio of 49.999% - ideally, your ratio should be 41% or below. You must be able to meet insurance requirements. With a conventional loan, your insurance will eventually cancel itself, lowering your monthly obligation; however, you must be able to meet those initial requirements. You may also have the option to roll mortgage insurance into your interest rate. The Effects of the COVID-19 Pandemic on Conventional Mortgage Loans Despite the economic uncertainty caused by the pandemic, historically low interest rates have spurred a refinance boom in the United States, jumpstarting an extremely competitive seller's market. While conventional rates are low, the effects of the virus are still discernable; traditional banks have tightened their requirements to even qualify for a mortgage in order to protect themselves. Credit score requirements have increased, as well as debt-to-income ratios and reserve requirements. In addition to making it more difficult to qualify for a loan, this makes the entire loan application process more difficult, time-consuming, and uncertain. How Can We Help? At Saxe Mortgage Company, we want to help home buyers in the Bay Area achieve their real estate goals. We offer easy, stress-free conventional loans at competitive interest rates so you get the loan you need without the hassle of working with the bank. We are a private money lender that has worked with brokers, investors, and borrowers for decades to provide reliable service and convenient hard money loans. We also offer investment opportunities in deeds of trust, one of the best and most stable investment vehicles in the market. This stability is passed on to you! Our company finances real estate transactions with private investor capital, allowing us the stability and flexibility you need for a streamlined process. We can help you borrow the money you need quickly without the difficulties of tightened mortgage requirements that you would get at a traditional bank. If you are looking for a conventional mortgage loan during the COVID-19 pandemic and would like to learn more about the options Saxe Mortgage Company offers, reach out to our office today!