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Conventional Loan Kansas City

Conventional home loans in Kansas City (aka Conforming loans) are not insured by any government program. They are the most common type of mortgages and follow the guidelines set forth by Fannie Mae and Freddie Mac (aka FNMA and FHLMC). Learn about the minimum down payment, qualification and competitive mortgage rates, which are at historic lows! Please find the program highlights below.

What are the Benefits of Conventional

Compared to government-backed mortgage products, they are more flexible in their respective home loan terms. They have fewer underwriting restrictions. Borrowers with stable employment, income, and credit are typically better candidates for a Kansas City mortgage loan. Speak with a Kansas City Mortgage Lender that you can trust!

Advantages of Conventional Loans:

  • Down payment as low as 3%
  • Fixed and Adjustable rates available
  • Lower mortgage rates for borrowers with Better credit
  • Terms from 10 to 30 years
  • Financing for Owner Occupied (primary residence), second home (10% down payment) and Investment property (20% down).
  • Both home purchase or mortgage refinancing transactions
  • No PMI with a 20% down payment. A Conventional loan with PMI can be canceled once sufficient equity is obtained

How do I apply for a Conventional Loan?

You can apply online for a Conventional home loan and receive your mortgage pre-approval within one business day. Get started on you application today:

Apply Now >

Mortgage Rates for Conventional Loans

Fixed Rates

With a fixed rate mortgage, the rate will never change for the life of your Conventional loan mortgage. Thus protecting you from rising rates. Conventional lending typically offer lower rates and APR’s than other types of financing.

Conventional mortgage loan terms are 10, 15, 20, 25 and 30 year fixed rate. Shorter terms for conventional loans have higher monthly mortgage payments but offer lower home loan interest rates. Therefore, you will build up home equity in your Kansas City home faster and pay less interest. You can use this acquired equity as a down payment when you buy a home.

Adjustable-Rate Mortgage (ARM)

An ARM has initial introductory rates for the first 5 or 7-years. Following the initial period, the rate can adjust annually for the remaining term. There are subsequent annual and lifetime interest rates caps that limit the amount the rates can change. Adjustable rates are best for shorter terms of home ownership.

conventional loan mortgage

Conventional Loan Required Down Payment

Conventional home loans require a minimum down payment of 3% of the Kansas City contracted purchase price. There are income limitations for first-time home buyers, which requires no additional property ownership at the time of closing. Otherwise, the minimum down payment is 5% of the purchase price. Conventional is a strong competitor to government-backed FHA loans. FHA’s minimum down is 3.5%.

While most FHA mortgage insurance remains for them for life, a conventional loans PMI may be canceled. Typically, those who have a FICO score of 680 or higher opt for this program over FHA.

Eligible sources for down payment

In summary, the down payment for closing can come from any asset to purchase real estate. However, loans and unverifiable cash are not allowable. Please feel free to contact a Kansas City Loan Officer to learn more information about the underwriting process.

Maximum Loan Amount

The maximum loan limit for Kansas City (Kansas and Missouri) purchase and refinance loans for 2020 is:

  • $510,400 for a one-family property
  • $653,550 for a two-family property
  • $789,950 for a three-family property
  • $981,700 for a four-family property

Home loans are available above these loan limitations, see Jumbo Loans.

Minimum Credit Scores

Conventional mortgage loans are a good choice for borrowers with a credit score of 620 or higher. However, there is “risked based” based pricing (See LLPA below). In other words, the interest rate is based on the middle FICO score and the amount of your down payment. FHA may be a better option if you have troubled credit. Contact a Kansas City  Loan Officer to find out which home loans are best for you.

Private Mortgage Insurance (PMI)

When putting less than 20% down payment requires PMI. The risked-based insurance protects the mortgage lender from losing money in case of default. Borrowers with good credit and a larger amount down (i.e. 10% or 15% down) can enjoy cheaper monthly insurance payment than with an FHA loan.

There are other loans that do not have PMI included in your monthly payments. Such as Lender-paid PMI, a combination of first and second loans and single payment PMI. A Loan Officer can help to determine which loan option is cheapest for your personal situation.

Debt-to-Income Ratios

Qualification for conventional home loans are determined by the debt-to-income ratio (DTI). This is the total monthly housing expense plus debt obligations divided by the total gross monthly income. This Debt-to-income ratio is one-way lenders measure your ability to manage the payments. Generally, the maximum DTI is 45% and up to 50% with compensating factors.

Strong compensating factors are; great credit score, job stability, and cash reserves. The best way to verify the maximum amount you can borrow based on your income level is to start pre-approval.

Eligible Properties

Many types of properties are eligible, for Example:

  • Single-family homes (Detached homes)
  • Planned Unit Developments (PUD’s) which typically consist of detached homes within a homeowner’s association.
  • 2, 3, and 4-unit properties
  • Condominiums
  • Some co-op properties
  • Manufactured homes (loan limitations apply)

Other Popular Loan Options

  • VA loans (No down payment)
  • FHA loans (3.5% down payment)
  • USDA loans (No down payment)
  • Jumbo loans

Have Questions? Call a Loan Officer today at  913.642.8300.

Lets Talk

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