California Conventional Loans
Most people have a pretty good idea of what their first home will look like. But when it comes to financing your home, you’ve got various home loans to choose from, depending upon your income, debt, credit history, and other factors. And while each loan type has its pros and cons, the most popular home loan for new and repeat homebuyers continues to be the conventional loan.
What Is A California Conventional Loan And Why You Should Choose This Type Of Financing
A California conventional loan is a type of financing loan that comes from a bank or other lending institution. They might also be referred to as “conventional mortgage loans” or “conventional financing”. Conventional mortgage in California is the most common form of home loan, and it offers a more set structure for borrowers.
Here are the basics of a conventional loan in California:
- Down payments: Conventional loans can be had with a down payment amount as low as 3% if you’re a first-time homebuyer.
- Credit rating: Homebuyers must have an acceptable credit score to be considered for this type of financing. Typically scores above 630 are considered to be “good,” and anything below that is “poor.” The lower your score is, the higher your interest rate will likely be. You must also have a debt-to-income ratio of less than 50%.
- Closing costs: Conventional loans usually require borrowers to pay fees when they close on a home, but these fees are typically less than those paid by FHA and VA buyers. Conventional loans do not require that the borrowers pay for inspections, appraisals or credit reports.
It has several attractive features that make it a great choice for many people, especially first-time homebuyers who have good credit, some funds saved for a down payment, and are at low risk of defaulting.
These features include:
- Low-interest rates: One key advantage of a conventional loan is the low-interest rate. Interest rates on these loans are often lower than those of other types of loans, such as government-backed loans.
- Fast loan processing: Conventional loans tend to have shorter processing times than other loans. This can be beneficial if you are looking to purchase a property quickly.
- Diverse down payment options: Another key advantage is that there are several down payment options available with a conventional loan. You can choose to put down as little as 3% of the purchase price or up to 20% in some cases. This can make it easier to qualify for a loan if you do not have a lot of cash available for a down payment.
- Low private mortgage insurance (PMI) rates: The PMI rates on conventional loans are often lower than those of other loan types.
- Lenient credit standards
California Conventional loans are available with both fixed and adjustable rates, and they can be used to finance primary residences, second homes, and investment properties. Also, some lenders may offer discounts on interest rates for certain programs, such as those offered by the Veterans Administration or Federal Housing Administration.
You can save money with a California Conventional loan
If you’re trying to save money or have issues with your credit score, or want to put as little money down as possible – conventional loans can be a smart choice because they offer flexibility and low monthly payments.
In addition, there are no prepayment penalties, so you can pay off your loan early if you want to. Conventional loans also have flexible credit requirements, so even if your credit score isn’t perfect, you may still be able to qualify. Whether you’re looking to buy your first home or refinance your current mortgage, California conventional loans can be a great option.
Just be aware of the Private Mortgage Insurance (PMI) if you put down less than 20%.
Easy to qualify for a California Conventional loan
If you’re thinking about buying a home in California, you may be wondering if you qualify for a conventional loan. As with any home loan, there are certain requirements you’ll need to meet in order to be approved.
Here’s a quick overview of what you’ll need to qualify for a California conventional loan:
- You’ll need to prove that you make enough money to cover the loan payments. This means providing documentation of your income, such as pay stubs or tax returns.
- Your income will need to be expected to continue into the future. This means having a steady job history and being able to demonstrate your ability to maintain employment.
- You’ll need to have enough assets to cover the down payment on the loan. This could mean savings accounts, investments, or other forms of property.
- It’s also important to have an acceptable credit history in order to qualify for a conventional loan. This means paying your bills on time and maintaining a good credit score.
If you’re not sure if you meet all of the requirements, don’t worry – at LBC Mortgage, our team of experts can help you figure out if you qualify for a California Conventional loan. Give us a call today, and we’ll be happy to help you get started on the path to homeownership.
Should You Choose a 15-, 20-, or 30-Year Term?
Most conventional loans have a 15-, 20-, or 30-year term. The length of your loan term will affect both your monthly payments and the total amount of interest you pay over the life of the loan. A longer loan term will result in lower monthly payments, but you’ll end up paying more interest overall. A shorter loan term will increase your monthly payments, but you’ll save on interest in the long run. You’ll also have the satisfaction of knowing that you’re debt-free sooner!
When choosing a loan term, it’s important to strike a balance between what you can afford each month and what will save you money in the long run.
Is California Conventional Loan The Best Option For You?
California conventional loans are a great option for first-time owners, but even if this isn’t your first home purchase, the down payment amount only increases by two percent, to be 5%.
In some situations, homeowners in California can save money by using a conventional loan because they don’t have to pay as much for insurance, inspection or appraisal costs. In addition, lenders provide conventional loan approvals by looking at how much the homeowner is able to pay back over the term of the loan rather than on how much they plan to borrow.
If you’re wondering how a conventional loan compares to a VA loan, an FHA loan or other types of mortgage, we encourage you to reach out to us at LBC Mortgage and allow us to better assist you in finding the right type of loan for your needs. Because all of these loans have different requirements, we can take the time to understand your unique situation as well as answer any questions you may have about the different types of loans.
Apply For a California Conventional Loan Today!
If you’re trying to save money or have issues with credit score, conventional loans can be a smart choice because they offer flexibility and low monthly payments. If saving money is important to you and you want to put as little money down as possible, California conventional loans may be the right type for you. Also, if you have good credit and want more loan options, conventional loans could be a better fit than FHA loan or stated income loan.
There are a lot of things to consider as you decide among the different types of loans to help you find one that’s the perfect fit for you financially. But you don’t have to do it all alone. At LBC Mortgage, we work with a variety of home loan funding options and can help you get approval when banks and other lenders turn you away.
What’s more, we’re extremely dedicated to helping you get the best deal. Rather than being treated like just a number, we want to get to know you and help you find the right financing for your needs. These are just a few of the many ways that we work hard to earn your business.
If you’re ready to learn more about how a conventional loan in California can help you, contact us today! We’ll take the time to answer all your questions as well as help you get the best deal on a conventional mortgage loan in California. We work with a large network of lenders and work hard to secure you the best possible rate.
Frequently Asked Questions
A Conventional Loan is a mortgage that is not backed by the government, such as an FHA or VA loan. They are typically available with either a fixed or adjustable interest rate and have lower credit score requirements than government-backed loans.
In order to qualify for a Conventional Loan, you will need to have a strong credit score and a down payment of at least 3%. You will also need to show proof of income and employment history.
One of the main benefits of a Conventional Loan is that you can avoid paying private mortgage insurance (PMI) if you put down at least 20% of the home’s value as your down payment. Additionally, Conventional Loans typically have lower interest rates than government-backed loans.
One of the main disadvantages of a Conventional Loan is that it can be difficult to qualify if you have a lower credit score.
The 2022 Conforming loan limit in California is now $647,200 for most counties, and in some high-cost counties, it’s as high as $970,800. Scroll down for your specific county limit.