Conventional Loan Flashcards
What is a Conventional Loan?
A conventional mortgage is a lender agreement that is not guaranteed or insured by the Federal Government under the VA, FHA, or RHS programs.
Is a Conventional Loan Insured?
A conventional loan is not insured or guaranteed by the government.
However, it can still follow the guidelines established by the GSE’s of FNMA and FHLMC.
What form does the Conventional Loan use?
Conventional Loan uses 1003 Loan Form
1003 – Uniform Residential Loan Application (URLA)
What type of property qualifies for a Conventional Loan?
Conventional Loan qualifies for 1-4 family residences, primary homes, secondary homes, investment properties
What is the qulaifing minimum Investment for purchase for a Conventional Loan?
First Time Home buyer
3% down payment required.
All others 5% on a FNMA or FHLMC Loan
What is the Qualifying Debit to Income Ratios (DTI) for a conventional Loan?
28%/36%
Qualifying Ratios for a conventional Loan debt-to-Income ratios (DTI) conforming DTI ratios are:
28% for housing ratio
36% for total debt ratio.
What is the Loan to Value for a Conventional Loan?
Loan to value (LTV) for a Conventional Loan is the ratio determined by taking the loan amount divided by the lesser of either the appraised value or purchase price.
What is Fannie Mae’s underwrighting system called?
Desktop Underwriter (DU)
FNMA maintains an AUS system called
Desktop Underwriter (DU)
Home many years prior to the loan application do lenders require from the applicant to provide income?
Two (2) years
4506-T – Lenders require this IRS form executed in order to verify the income reported on the income tax returns for the two (2) years prior to the loan application. This request is completed to help identify fictitious information received from borrowers.
What credit Score does a Conventional Loan require?
620 credit score
Credit score – lenders establish minimum credit scores based on the programs offered. Conforming loans require a 620 minimum credit score.
How many days must a occupant certify they will occupy the property?
Sixty (60) Days
Occupancy – when purchasing a home to be owner occupied, the new owners must certify they intend to occupy the home within sixty (60) days. Lenders verify occupancy by US postal mail service, utility service records or possibly a drive-by appraisal.
What is the late Fee on a Conventional Loan?
5% P&I
What is the sellers allowable concession on a Conventional Loan?
3% if the LTV is 90%+
6% if the LTV 75%-90%
9% if the LTV 75% and under
2% for investiment property
When does the PMI drop of on a Conventional Loan?
PMI drops of at 88% LTV or 22% Equity
Does a conventional loan have a Due on Sale Clause?
Yes
