Podcast - 067: How to buy a home with a conventional loan in 2022?

In this podcast, realtor Anthony Luevanos and lender Angel Luevanos break down what it takes to purchase a home with a conventional loan in 2022.

A conventional loan is a mortgage loan not backed by a government agency. Conforming conventional loans follow the rules set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation (Freddie Mac). Non-conforming loans do not follow these guidelines and can have a higher interest rate. In our podcast and guide below, we look at conforming mortgage loans.

What are the minimum requirements to qualify for the FHA loan?

The minimum downpayment is 3% for first-time homebuyers and 5% for everyone else. The credit score is 620, but we recommend a 680 since it's more challenging to get approved with a lower score. We recommend conventional if your credit score is 720 or higher since the interest rate will be better. The maximum debt-to-income ratio is 49.99%. The conventional loan limits in 2022 range from $420,860 in low-cost areas to  $970,800 in high-cost areas like Los Angeles and Orange County.

What are the pros of the conventional loan?

- Low down payment requirement

- Cheaper mortgage insurance

- More affordable payment payment

- Less strict property requirements

- Do not need to refinance to remove mortgage insurance

- Allows you to keep a low-interest rate 

What are the cons of the conventional loan?

- Rates are higher

- A higher credit score needed

- Need to be a more qualified client overall

- Not ideal to buy units because it requires a high down payment

Overall, the conventional loan is best for clients with high FICO scores, higher down payments, and sellers who want to transfer equity to a new home.

This market is tough, and we understand that. So we made a free eBook to help you. “How to get a good deal in a seller’s market” eBook