Conventional Home Loans in Virginia
If you’re experienced in the world of real estate, you’ve probably heard of a conventional home loan. After all, conventional loans are the most common mortgage financing³ tool. Unlike Virginia FHA, Virginia USDA, or VA loans in Virginia⁵, conventional loans aren’t guaranteed or insured by the federal government. Instead, home buyers secure these loans through private entities like banks, credit unions, and mortgage companies.
Are you considering a conventional home loan in Virginia? If so, choose a home lending process that doesn’t suck. At Dash Home Loans, we’ve streamlined the financing process so closing on that quaint two-bedroom is a cinch.
When you work with Dash, you work with real-life superheroes. We call them Mortgage Coaches. Our Mortgage Coaches are like Quicksilver. They understand that you’re eager to buy a new house, so they get you pre-qualified fast. Plus, once you pre-qualify with the Dash Loan Closing Guarantee¹, you’ll close as expected!Apply for a conventional loan
- What Is a Conventional Home Loan?
- Conventional Loan Requirements in Virginia
- Benefits & Disadvantages of Conventional Loans
- Conventional Loan Limits for Virginia Borrowers
- Who Qualifies for a Conventional Home Loan in Virginia?
- Types of Conventional Loans for Virginia Home Buyers
- How to Apply for a Conventional Loan in Virginia
What Is a Conventional Home Loan?
A conventional loan is a mortgage not insured or offered by the government. Virginia VA loans⁵, for example, are guaranteed by the U.S Department of Veterans Affairs. That means the VA⁶ will protect the mortgage lender if the borrower defaults on the loan. This lowers the credit risk.
Comparatively, conventional loans are offered through private entities like banks, credit unions, mortgage companies (like Dash), and other financial institutions. Some conventional loans are considered “conforming,” meaning they meet the requirements to be sold to government sponsored enterprises. By selling off mortgages, lenders replenish their funds and can offer more loans to more home buyers.
Typically, conventional mortgages have a fixed interest rate. With a fixed interest rate, home buyers can expect the same monthly payment for their entire loan term. Of course, there are adjustable-rate mortgages, too. These are designed for borrowers who expect their income to increase over time.
Conventional Loan Interest Rates
Conventional mortgage interest rates vary depending on the respective lender and the borrower’s credit score – more so than for government-backed loans. Since interest rates are also based on mortgage-backed securities (which are traded just like stocks) rates can change daily, even hourly.
To get the best mortgage rate, consider improving your credit score, saving up for a bigger down payment, choosing a shorter loan term, decreasing your debt, or increasing your income. Working with Dash can help too. At Dash Home Loans, we don’t settle for just “okay” interest rates. No, our Mortgage Coaches will hunt until they find the optimal rate for you!
Conventional Loan Requirements in Virginia
Lenders view conventional loans as riskier than government-backed mortgages. Why? Well, if a borrower defaults on an Virginia FHA, Virginia USDA, or Virginia VA loan, the respective government agency will pay a claim to the lender for the unpaid balance. But if a borrower defaults on a conventional loan, the private lender takes a hit.
To decrease risk, private lenders have much stricter requirements. Lenders typically require a significantly higher credit score and lower debt-to-income ratio. They will also require an appraisal to ensure that the home is in good condition and is worth at least as much as the loan.Apply now
Benefits & Disadvantages of Conventional Loans
Let’s face it: Getting approved for a conventional loan can be tricky, especially for low- to moderate-income home buyers with less-than-perfect credit. However, conventional loans have many advantages. For starters, this loan type typically offers more competitive interest rates and higher lending limits. Mortgage insurance is also a consideration. Whereas most FHA loans require PMI, conventional loans only require it if you put less than 20% down.
FHA or Conventional Loan? Which Is Better?
Whether you’re a first-time home buyer or a real estate guru, you may wonder: What’s better – an FHA loan in Virginia or a conventional loan? At Dash, our Mortgage Coaches are faced with this question almost daily. We always tell home buyers that it depends. If you have a lower FICO®* score and limited cash, an FHA loan could work. However, if your credit score is higher than 640 and you have enough cash for a larger down payment, a conventional loan could be better for you.
Conventional Loan Limits for Virginia Borrowers
The amount you can borrow is set by the lender. However, there are also additional limits. How much you can borrow depends on your creditworthiness, debt-to-income ratio, and other factors. However, private lenders must also conform to standards set by the Federal Housing Finance Agency. The conforming loan limit for 2023 is $726,200 for most areas. In some high-dollar real estate areas, borrowers can get approved for loans up to $1,089,300.
Who Qualifies for a Conventional Home Loan in Virginia?
Private lenders have fairly stringent requirements. You may qualify for a conventional home loan in Virginia if:
- You meet the credit score requirements. The minimum credit score will vary from lender to lender; however, most financial institutions expect a FICO®* score of at least 680. Dash offers conventional loans to borrowers with scores as low as 620. Just keep in mind that home buyers with a score over 740 get the best rates.
- You have an acceptable debt-to-income ratio. Your debt-to-income ratio is calculated by dividing total monthly debt payments by monthly gross income. Most lenders want to see a debt-to-income ratio of about 36%.
- No major credit report issues, like a foreclosure or bankruptcy.
- A down payment of at least 3%. If you don’t want to pay PMI, you’ll need to put down 20% of the loan amount.
Types of Conventional Loans for Virginia Home Buyers
Conventional home loans are like popsicles – they come in lots of different flavors. Each type of conventional home loan is designed for borrowers with different needs. Not sure which is for you?
Take a look at the conventional loans we offer, then get in touch with a Mortgage Coach here at Dash.
Just like Mike Krzyzewski, your Mortgage Coach is here to make sure your lending process is a slam dunk. They can answer any and all questions you may have about conventional loans in Virginia.
- Conforming Conventional Loan: Meets standards set by the Federal Housing Finance Agency.
- Non-Conforming Conventional Loan: Doesn’t meet standards set by the Federal Housing Finance Agency.
- Virginia Jumbo Loan: A type of nonconforming conventional loan that exceeds standard lending limits.
- Fixed-Rate Loan: Traditional loan option with fixed interest rates.
- Adjustable-Rate Loan: Designed for borrowers who anticipate future increases in income.
- Conventional Renovation Loan: Perfect for home buyers purchasing a fixer-upper.
- Subprime Loan: Loan offered at a higher interest rate to borrowers with less-than-perfect credit.
How to Apply for a Conventional Loan in Virginia
To apply for a conventional loan, you’ll need to submit an application showing your income, credit history, and all assets, such as cash, retirement investments, and even life insurance. Mortgage lenders also want to make sure you have several months’ worth of mortgage payments in your bank account in case of an emergency.
Applying for a conventional loan in Virginia can be quick and easy when you work with Dash. At Dash Home Loans, our Mortgage Coaches will walk you through each step of our streamlined, five-star lending process. Ready to get started?Apply now
Completing a conventional loan application only takes a few minutes. However, lenders can take up to three months to process all of your information.
Documents & Paperwork to Submit
Before applying for a conventional home loan in Virginia, it’s a good idea to gather all the necessary paperwork. This documentation includes:
- Proof of Income: You’ll need pay stubs, two years of federal tax returns, W-2 forms, alimony and child support documents, and more. If you’re self-employed or a freelancer, you’ll need to show at least two years of steady employment in the same industry.
- Asset & Debt Verification: To calculate your debt-to-income ratio, lenders will need to see proof of all monthly debt payments like auto and student loans, credit cards, and existing mortgages. They will also need to see proof of all assets like bank and investment accounts.
- Identification: To confirm your identity, you’ll need to submit a copy of your driver’s license or State ID. You’ll need to confirm your Social Security number too.
All of this information is needed to confirm your loan eligibility.
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Frequently Asked Questions
Virginia Conventional Loan FAQs
Still have some questions about conventional home loans in Virginia? Want to learn more about what makes the Dash process so easy? Contact us to connect with one of our Mortgage Coaches.
How much do I have to put down on a conventional loan?
The minimum down payment for a conventional loan is 3%. However, borrowers with lower credit scores and higher debt-to-income ratios may be required to put down more. Also keep in mind that if you put down less than 20%, you will be required to purchase mortgage insurance.
Is it harder to qualify for a conventional loan?
Can you get down payment assistance with a conventional loan?
Yes. The Virginia Housing Development Authority provides a down payment assistance program⁶ for first-time home buyers. This program offers a grant of up to 2.5% of the home’s purchase price. To qualify, you must meet certain credit score and income requirements. Read more about these requirements on the VHDA website.
*FICO® is a registered trademark of Fair Isaac Corporation.
This ad is not from HUD or FHA and was not approved by HUD or any government agency.
¹ Dash Loan Closing Guarantee Disclaimer: Guarantee is based on loan closing; restrictions apply.
² No-Down-Payment Disclaimer: Closing costs and fees may still apply.
³ Lending Disclaimer: Mortgage rates are subject to change and are subject to borrower(s) qualification. APR rate(s) quoted is/are based upon a (loan amount), (loan term, including whether fixed or ARM) year.
⁴ Refinancing Disclaimer: When it comes to refinancing your home loan, you can generally reduce your monthly payment amount. However, your total finance charges may be greater over the life of your loan. Your PRMI loan professional will provide you with a comprehensive refinance comparison analysis to determine your total life loan savings.
⁵ VA Home Loan Disclaimer: VA home loan purchases have options for 0% down payment, no private mortgage insurance requirements, and competitive interest rates with specific qualification requirements. VA interest rate reduction loans (IRRRL) are only for veterans who currently have a VA loan – current loan rate restrictions apply, and limits to recoupment of costs and fees apply. VA cash-out refinances are available for veterans with or without current VA loans. Policies and guidelines may vary and are subject to the individual borrower(s) qualification. Program and lender overlays apply.
⁶ Down Payment Assistance Disclaimer: First lien interest rates may be higher when using a DPA second.
⁷ Pre-Approval Disclaimer: Pre-approvals are given to clients who have met qualifying approval criteria and specific loan requirements at the time of applications. Results may vary.
General Disclaimer: The content on this page has not been approved, reviewed, sponsored, or endorsed by any department or government agency.
NMLS® Consumer Access℠: https://nmlsconsumeraccess.org/
Virginia-Bureau of Financial Institutions: MC-2248, Broker MC-2248, NMLS #3094
For refinance advertisements that state a reduction on monthly payment, please note: the total finance charges may be higher over the life of the loan.