CONVENTIONAL - Conventional loans are viewed as the most secure loans because their loan-to value ratios are often lowest. Traditionally the ratio is 80 percent of the value of the property or less because the borrower makes a down payment of at least 20 percent
To qualify for a conventional loan under Fannie Mae guidelines, the borrower's monthly housing expenses, including Principal Interest must not exceed 28 percent of total monthly gross income. Also, the borrower's total monthly obligations, including housing costs plus other regular monthly payments must not exceed 36 percent of his or her total monthly gross income. Loans that meet these criteria are called conforming loans.
Conforming loan limits for first mortgages are the following:
One-family loans: $729,750
Two-family loans: $934,200
Three-family loans: $1,129,250
Four-family loans: $1,403,400
Note: Maximum original loan amounts are 50 percent higher for first mortgages on properties in Alaska, Hawaii, Guam and the U.S. Virgin Islands.
Documentation and fair-to-good credit are necessary.
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