The current conventional loan limit is $453,100, but Fannie and Freddie do allow higher limits in some areas. A conventional loan limit in some parts of California may be as high as $612,950. The highest limit available is in Honolulu, Hawaii at $721,050. Keep in mind that these are loan limits and not home price limits. In any area of the country, someone refinancing a $1 million home could receive a conventional loan of $453,100.
Homeowners who refinance a multi-unit home have access to higher loan limits; standard limits are as follows:
+1-unit home: $453,100
+2-unit home: $580,150
+3-unit home: $701,250
+4-unit home: $871,450
Just like with most other loan types, you will provide documentation proving your income and assets. Documentation that may be required includes:
60 days of bank statements, all pages
30 days of pay stubs
2 years tax returns if self-employed or have rental properties or non-salary income (retirement pension, etc.)
2 years W2s
Social security, retirement, and/or pension award letters and 2 years’ 1099s
Rental agreements for any owned investment properties
Lenders like to see a certain DTI ratio; a percentage of monthly income spent on debt payments. This can include mortgages, student loans, auto loans, credit card payments and child support.
About 60% of all mortgage applicants choose conventional loans because of their great rates, lower costs and home buying flexibility. One benefit to securing a conventional mortgage is that they generally pose fewer hurdles than government backed agencies. Conventional loan applicants typically have shorter and less complicated home loan approvals. Additional program highlights are:
Can be used to buy primary or secondary homes, or rental property
Available in fixed rates, adjustable rates (ARMs), and terms from 10-30 years
Down payments as low as 3%
Zero monthly mortgage insurance with a down payment of at least 20%
Low mortgage insurance costs
When home equity reaches 20%, mortgage insurance can be canceled.