Conventional Loans in Virginia
Conventional loans are a cornerstone of the mortgage market in Virginia, offering an ideal option for borrowers with strong financial profiles. These loans are known for their lower interest rates, reduced paperwork, and streamlined processes, making them a preferred choice for those who meet the stringent lending requirements. If you have a solid credit history and can afford a substantial down payment, conventional loans might be your best bet.
Ready to get started? Contact us today to start your journey toward homeownership.
Why Choose Conventional Loans in Virginia?
The Virginia real estate market is diverse, with opportunities ranging from urban centers like Richmond to scenic rural areas. Conventional loans are particularly advantageous here because they cater to a wide range of property types, including single-family homes, multi-family units, and even condominiums.
For Virginia residents with strong credit and the ability to make a significant down payment, conventional loans can provide lower interest rates and more favorable terms than government-backed alternatives.
Types of Conventional Loans We Offer in Virginia
Fixed-Rate Mortgages:
A Fixed-Rate Mortgage is a type of home loan where the interest rate remains constant throughout the entire loan term, typically 15 or 30 years. This means your monthly payments for principal and interest will never change, providing stability and predictability in your budgeting. Fixed-Rate Mortgages are ideal for homeowners planning to stay in their homes long-term, as they protect against potential future interest rate increases.
Adjustable-Rate Mortgages (ARMs):
Adjustable rate mortgages (ARMs) have interest rates that fluctuate. There is an initial upfront period during which the tariff is fixed for one year. During this time, interest rates and monthly payments are often lower than with a fixed-rate mortgage. However, beyond the initial time, your rate may rise or fall in response to market conditions. ARMs are appropriate for borrowers who plan to stay in their home for three, five, seven, or ten years before the interest rate adjustments in accordance with the mortgage terms.
Conforming loans
Conforming loans are mortgages that fall within the boundaries set by the FHFA. This implies that Fannie Mae and Freddie Mac, two government-sponsored firms, can purchase them in the secondary mortgage market. All conforming loans are conventional loans; however, not all conventional loans are conforming loans. For example, a jumbo loan from a private bank that exceeds the FHFA limitations would be considered a nonconforming conventional loan.
Jumbo loans
Jumbo loans refer to mortgages that surpass conforming restrictions. These loans are classified as nonconforming because they cannot be sold to Fannie or Freddie, but they are still available to well-qualified applicants who require a more flexible financing choice. Jumbo loan rates are typically higher than those for smaller mortgages, however the difference has narrowed in recent years.
Eligibility Criteria for Conventional Loans in Virginia
- A minimum score of 620 is typically required, with higher scores leading to better rates.
- While a 20% down payment is typically required, many fixed-rate conventional loans for a principal property allow for down payments as little as 3% or 5%.
- Lenders generally look for a DTI of less than 45%
- Can cancel mortgage insurance with 20% equity.
Our Conventional Loan Process in Virginia
Start with a consultation to explore your options and determine the best loan type for your needs.
Application Process:
- Check your credit : Check your credit report for any inaccuracies or missing information. Also, examine your credit score and take efforts to improve it, such as paying off debt.
- Save for a down payment : Conventional loans need at least 3% down. For a $300,000 mortgage, that is $9,000. Remember that a larger down payment increases your chances of getting a better mortgage rate.
- Check your debt-to-income (DTI) ratio : Your DTI ratio measures how much income you have compared to how much debt you owe each month. A decent DTI is 36 percent or less. Some lenders will allow you to have a DTI of up to 50 percent, but the majority impose a limit of 43 to 45 percent.
- Collect your paperwork : Your lender will want documents from you to verify your financial situation. If a friend or relative contributes to your down payment, be prepared to share your government-issued ID, pay stubs, W-2s, 1099s, bank statements, investment and retirement account statements, and gift letters.
- Compare mortgage lenders : Look into at least three different lenders to get the best offer.
- Get pre approved : Before shopping for a property, you must first obtain financing approval. A lender will do a credit check and ask you to provide documentation verifying your income, assets, and debt. Pre Approval is a contract in principle to lend you a specific amount of money.
- Accept an offer on a house : Find a home you want, make an offer, and obtain a signed purchase and selling agreement.
- Go through underwriting : Underwriting takes place between the acceptance of your offer and the closing on your home. This is the formal process of applying for a mortgage — a specified amount on a specific property. Your lender reviews all of the data you supplied for pre approval, occasionally requesting extra information, as well as having the home assessed.
- Close the loan : The final stage is closing day, when you finalize your home purchase and mortgage, pay your closing expenses, and receive the keys to your property.
FAQ
Conventional loans have stricter requirements and do not require mortgage insurance if you put down at least 20%, unlike FHA loans, which require mortgage insurance premiums for the life of the loan
Yes, conventional loans offer flexible refinancing options, including cash-out and streamline refinancing.
You pay mortgage insurance on a conventional loan until you have at least 20% equity in your house. At this stage, you can ask to have your mortgage insurance withdrawn. Lenders are legally required to remove PMI when your equity reaches 22% of the home’s value at the time the mortgage was issued, or halfway through your loan term.
Why Choose Us for Conventional Loans in Virginia?
With extensive experience in the Virginia market, our team is dedicated to providing personalized service and expert guidance throughout the loan process. Our deep local knowledge, combined with a commitment to transparency and client satisfaction, ensures that you receive the best possible mortgage solution tailored to your unique financial situation.