Conventional Loans for Self-Employed Borrowers

What Are Conventional Loans?

Conventional Loans are mortgage loans that are not insured by the government (like FHA or VA, Loans), but they typically meet the lending guidelines that Fannie Mae or Freddie Mac has set. Typically, conventional loans have better rates than other types of loans; however, they typically require a borrower to have established, have a reasonable amount of monthly debt obligations, a down payment of 3%-20% and documentable monthly income. Conventional loans are ideal for W-2 employees and at least a 3% down payment for first-time home-buyers or buyers who have not had a mortgage for at least the past 3 years.

Most Common Types of Conventional Loans

Fixed Rate Mortgages: Your rate and payment never change.

30 Year Fixed Rate
Benefit: Lowest fixed monthly payments
15 Year Fixed Rate
Benefit: Lower rate than the 30 Year Fixed Loans; Pay less interest and pay your home off more quickly.
Custom Term
Benefit: We can customize the term of your loan. This is especially appealing to a borrower who is refinancing but doesn't want to lengthen the term with the new loan.
For Example: if you have 22 years left on your loan, you can refinance into a new loan with a 22 year term.

Adjustable Rate Mortgages: After the initial period your interest rate can change annually, on the anniversary of our mortgage.

3/1 ARM
Fixed rate for 3 years, Adjustable Rate for remaining 27 years.
5/1 ARM
Fixed rate for 5 years, Adjustable Rate for remaining 25 years.
7/1 ARM
Fixed rate for 7 years, Adjustable Rate for remaining 23 years.

Conventional Down Payment Requirements

For Purchase transactions, Conventional Loans traditionally require you to put at least 20% down to avoid the mortgage insurance (MI) requirement. However, there are many options. For a Refinance transaction, most lenders require at least 10% equity in the property.

Eligible Property Types

Most conventional loan programs allow you to purchase single-family homes, warrantable condos, planned unit developments (PUDs), and 1-4 family residences. A conventional loan can also be used to finance a primary residence, second home or investment property.