Conventional? FHA? ARM? We'll find the right mortgage loan for you.
At Chaos Home Loans, we focus mainly and are experts on VA Loans. With that said, we’ve done countless conventional, jumbo, and FHA loans. We have experts in every type of mortgage loan.
Conforming mortgages conform to the underwriting guidelines set by Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac are quasi-government organizations which create a secondary market for mortgages to be purchased and sold. The majority of mortgages obtained in the U.S. are conforming loans. Fannie and Freddie also set certain loan limits depending on which county you live in. For most areas the conforming loan limit is $510,400. This is a raise up from the previous years (2019) loan limit of $484.350.
- For primary residences and second hoes down payments can be gifted entirely by a friend or family member.
- Monthly private mortgage insurance is required when you put less than 20% down.
- Impound accounts are also required when loan-to-value rations are 90% or greater.
Minimum down payment for a primary residence is usually 5%, eligible first time homebuyers can put as little as 3% down.
Can be used to purchase a primary residence, investment property, or second home
Conventional vs. “Conforming Mortgages”
Be careful not to confuse Conventional Mortgages with “Conforming Mortgages”. Often times, these terms are used interchangeably incorrectly. Conventional mortgages are not insured by the Federal Housing Administration (FHA) nor guaranteed by the Department of Veteran Affairs (VA), or the U.S. Department of Agriculture. In short, conventional mortgages are most institutional mortgages, with no government intervention.
The Federal Housing Administration insures FHA mortgages. FHA loans are more flexible with down payment options and underwriting guidelines. They are abatable for all borrowers who qualify.
Important aspects of FHA Mortgages
- 3.5% minimum down payment for all property types.
- Impound account always required
- Down payment can be entirely gifted
- Generally lower interest rate than conforming loans
- Can only purchase as a primary residence
- Condos must be FHA-approved.
- Up front mortgage insurance premium and monthly mortgage insurance payment are always required. The up-front mortgage insurance premium (UFMIP) is typically financed into the loan amount.
When loan exceeds a county’s loan limits, they’re considered a “jumbo mortgage”. These loans are considered “non-conforming”. Because they’re non-conforming and are not backed by Fannie Mae or Freddie Mac they have stricter underwriting guidelines. These guidelines include tighter debt ratio requirements, larger down payment and reserve requirements, and tighter credit standards. With a jumbo loan, you can purchase a primary residence, a second home, and even an investment property,
VA Loans are mortgages guaranteed by the U.S. Department of Veteran Affairs. With flexible underwriting and down payment guidelines these are the best options for veterans and their spouses only.
- No down payment
- Generally lower interest rates than conventional loans
- No monthly private mortgage insurance
- Can only be used to purchase a primary residence
- Impound account required
- A one-time VA funding fee is required at close. The funding fee can be financed into the loan amount. Veterans who receive a service connected disability are often exempt from this fee.
Have you found a home you like? Or you’re ready to get shopping for a new home? We’re happy to do your pre-approval free of charge.