While COVID-19 is changing our circumstances rapidly, we want to keep you informed on what is currently available to you and what it all means. Because they are constantly changing, you should call us to get the daily FHA, VA, and USDA quotes. In the meantime, conventional mortgage loans are currently available to those who qualify.
What is a Conventional loan?
A conventional mortgage is a loan that is not backed by a government agency, such as FHA or the VA. These are usually 15, 20, or 30-year loans. Conventional mortgage borrowers are low-risk, have secure financial standing, and make larger down payments. Because of this larger down payment, they often have lower monthly payments. Conventional loans are available to people who meet a set of requirements, and borrowers who put down 20% or more do not have to buy mortgage insurance, unlike government-backed loans or loans with lower down payments. If this is not true for you, you may be able to cancel mortgage insurance once your loan balance reaches a certain threshold.
A conventional loan traditionally requires up to a 20% down payment, but we can now accept as low as 3% down! Here’s what you need to qualify:
- Good credit (640 and above)
- A credit to debt ratio of 45% or better
- A 3-5% down payment (For first time buyers, 3%)
What is Forbearance?
For those who have lost their jobs due to COVID-19 and cannot pay their mortgages, the government has announced options to help ease the pressure. Forbearance is an agreement between you and your servicer to delay foreclosure for a certain time period. This is not forgiveness, and it does not mean you don’t have to pay your mortgage. If you are unable to make payments due to the pandemic, contact your servicer as soon as possible to discuss your options to avoid being penalized. If you have the means to pay your mortgage, you are still required to. If you expect that you might be negatively impacted by the pandemic, you should not proceed with a new mortgage or refinance.
If you have questions about mortgages and how they are being affected at this time, feel free to contact me! I am happy to help you navigate this confusing time. If you are eligible for a conventional loan and would like to start the process, you can apply on my website. Stay well!