Conventional Loans

Fannie-Mae (FNMA), Freddie-Mac (FHLMC)

 

Conventional Home Loans: Flexible Options to Help You Purchase Your Dream Home

At AAA Capital Funding, we’re committed to helping you purchase your dream home by offering a wide range of mortgage solutions tailored to your financial needs. This section is designed to help you better understand conventional mortgage products, including popular options backed by Fannie Mae (FNMA) and Freddie Mac (FHLMC).

What Is a Conventional Loan?

A conventional mortgage is a home loan that is not insured by the federal government and typically conforms to the guidelines set by Fannie Mae and Freddie Mac. One of the key benefits is the flexibility it offers, including down payments as low as 3% for qualified buyers.

Two widely used programs under this category are the HomeReady and Home Possible programs, which have helped countless individuals and families become homeowners. During your mortgage approval process, we will clearly present your options and help you determine which program best fits your needs.

Key Benefits of Conventional Loans

• Down payments starting at just 3%

• Low, fixed interest rates

• Cancellable private mortgage insurance (PMI)

• Flexible options for co-borrowers

• Allows non-occupying co-borrowers

• Supports additional income sources

Mortgage Insurance and Equity

If your down payment is less than 20%, conventional loans typically require private mortgage insurance (PMI). However, we offer options to eliminate PMI with as little as 5% down—though this may result in a slightly higher interest rate. Many borrowers choose the lower rate and later cancel PMI once they’ve built up at least 22% equity in their home.

To avoid PMI from the outset, a 20% down payment is required at the time of purchase.

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Conventional Loan Requirements

Credit Score Guidelines

To qualify for a conventional home loan, a minimum credit score of 620 is typically required. Your credit score is determined by the three major credit bureaus: Equifax, Experian, and TransUnion. We use the middle score from your credit report to assess your eligibility.

Eligible Property Types

Conventional loans can be used to finance a wide variety of properties, including:

• Single-family homes

• Townhomes and villas

• Condominiums

• Multi-unit properties (duplexes, triplexes, and quadplexes)

If you’re purchasing a multi-unit home and plan to occupy one of the units, the projected rental income from the additional units can be used to help you qualify.

Income and Asset Verification

We work with all types of income sources:

• Wage earners (W-2 employees): We’ll review your two most recent tax returns and a recent pay stub.

• Self-employed borrowers: In some cases, only your most recent tax return (personal and business) is needed.

• Retirees: We accept retirement income, such as Social Security or pension payments, with proper documentation.

In addition, you’ll need to provide bank statements to verify your available assets. Gift funds are allowed for your down payment or closing costs, as long as they come from an eligible and verifiable source.

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Why Choose AAA Capital Funding?

We have been helping homebuyers navigate the mortgage process since 1997, our team is here to provide expert guidance every step of the way. Whether you’re a first-time buyer or upgrading to your forever home, we’ll help you find the right loan to make homeownership a reality.