Conventional Loans

Conventional loans are usually loans with 20% or greater down payments. There are conventional loans available with less than a 20% down payment, but these require private mortgage insurance. Most conventional loans are currently originated under Fannie Mae (FNMA) or Freddie Mac (FHLMC) guidelines. This enables them to be purchased by Fannie Mae or Freddie Mac after your closing.

As the current lending environment shifts, there will be a push by Freddie and Fannie to purchase less and less of the conventional loans being originated. For now though, the following guidelines are generally reflective of both agency’s guidelines (although there can be some differences between to two agencies guidelines in specific situations).

Here is a general overview of the guidelines:

DOWN PAYMENT:
5% of the purchase price (can be a gift from a relative)
MAX LOAN AMOUNT:
Depends on your county, but usually $417,000 in Colorado (See Limits Here)
MORTGAGE INSURANCE:
The type of mortgage insurance you go with on a conventional loan depends upon your selection as a consumer. In general there are two types of mortgage insurance that are most often chosen – Monthly Mortgage Insurance and Single Premium Mortgage Insurance.

Check out our Mortgage Insurance page that describes the types of MI available and the specifics of each option. Mortgage insurance rates change depending on your down payment amount and credit score. There are even differences in certain mortgage insurance rates depending on the MI company that your lender selects.

View our Mortgage Insurance information page here:

Below is a summary of the waiting periods conventional loans require for most major derogatory credit events:
BANKRUPTCY CHAPTER 7:
4 year waiting period from the date of discharge. An explanation is required.
BANKRUPTCY CHAPTER 13:
No waiting period required if Chapter 13 was completed successfully. If you are still in Chapter 13, you have to get permission from the court to proceed with a home purchase and you have to have been paying on the Chapter 13 successfully for 12 months or more.
SHORT SALE:
3 year waiting period from the date of sale. An explanation is required.
FORECLOSURE:
3 year waiting period from the public trustee’s certificate of purchase. An explanation is required.

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