High-Level Highlights:

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-For most scenarios, the maximum loan amount is $726,200.

-The minimum credit score required is 620.

-A down payment as low as 3%.

-Available for primary, secondary, and investment properties.

-No monthly mortgage insurance is needed with a down payment of 20% or more.

-Cash-out refinancing is available up to 80% loan-to-value (LTV), and rates are higher than on a no cash-out refinance.

-The maximum qualifying debt-to-income (DTI) is 50%.

 

Further Highlights:

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-Higher loan amounts are available for multi-unit properties (with a minimum down payment of 25%).

-On many transactions, an appraisal is not needed.

-The minimum down payment required is 10% for a second home and 15% for an investment property (the interest rates are significantly higher than for a primary home).

-For condos, the condo association must fill out a questionnaire. The answers given could make the property ineligible for a conventional loan.

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Programs Available on Conventional Loans (many can be used simultaneously on the same transaction):

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-High-Balance: In many counties, the maximum loan limit is higher than $726,200. Where available, the interest rate is generally better by staying under a $726,200 loan amount.

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-HomeReady/HomePossible: These programs allow for a 3% down payment without an increase to the interest rate and monthly mortgage insurance that would otherwise apply. There is an income ceiling limit for program qualifications that vary geographically – you can check them out here. This can only be used for a primary residence.

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-RefiNow: This program allows a maximum DTI of 65%. To qualify, you must already have a Fannie Mae-owned loan and have an income below 100% of your area’s median income, which you can check here. This can only be used for a primary residence.

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-Family Opportunity: This program enables the purchase of a home for elderly parents or adult children with disabilities as a primary home, even when the borrower will not be occupying the property. This confers all the benefits listed above of buying a home as a primary residence.

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-Renovation/Energy: The renovation program allows buyers to borrow extra money needed to complete renovations after closing. This program has some drawbacks: more extensive documentation requirements, a lower maximum DTI of 45%, and higher interest rates. The energy program is similar, but funds are for energy-efficient improvement projects.

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-Student Loan Cash-Out Refinance: This program allows cash-out refinances to have the same interest rate as no cash-out refinances, with the stipulation that all the cash taken out goes towards paying off student loans belonging to the borrower.

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-Delayed financing: This program allows for a cash-out refinance on a recently purchased home without the 6 month waiting period that would otherwise apply. Using this program, you can buy a home for cash to close quickly and then get your home financed after closing.