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Conventional Loans – Kansas City Metro Area

Conventional Loans in Kansas City are backed by Fannie Mae and Freddie Mac and offer flexible home ownership terms and competitive rates. Ideal for borrowers with stable financial histories, these mortgage loans typically require a higher credit score but come with the advantage of lower overall costs compared to government-backed loans.

Benefits of Conventional Loans for Kansas City Residents

  • Competitive Interest Rates: Secure a favorable rate and annual persentage rate to reduce your payment amounts over the loan’s term.
  • Diverse Term Options: Choose from 10, 15, 20, or 30-year terms to fit your financial goals.
  • Low Down Payments: Down payments can be as low as 3%, making home ownership accessible.

Loan programs for first-time homebuyers

Application Process in Kansas City

Our streamlined application process is backed by our expert team, with dedicated Loan Officers ready to guide you through every step of your journey. Additionally, we can connect you with top real estate agents who are well-versed in Kansas City’s unique property landscape. Ensuring a seamless experience from application to closing.

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Understanding the Kansas City Market

Kansas City’s real estate market is diverse and dynamic. Understanding local trends, such as average home prices and inventory levels, can help you determine the right time to buy. Our tools and resources provide up-to-date market data to guide your investment decisions.

Mortgage Rates for Conventional Loans

Fixed Rate Mortgage: A fixed rate remains constant throughout the life-of-the-loan, protecting you from increasing interest rates. Conventional lending offers flexible loan terms and typically features lower rates and APRs compared to other mortgage types. You can choose from various fixed-rate loan terms, including 10, 15, 20, 25, and 30 years.

Opting for shorter-term loans means higher monthly mortgage payments but lower interest rates. This allows you to build equity in your Kansas City home faster and pay less interest over time. The equity you accumulate can be used as a down payment when purchasing a new home.

Adjustable-Rate Mortgage (ARM): An ARM offers an initial fixed interest rate for the first 5 or 7 years, after which the rate can adjust annually based on market conditions. This adjustment is subject to annual and lifetime caps that limit how much the interest rate can increase. ARMs are typically a good choice for those planning shorter-term homeownership, as the lower initial rates can provide cost savings during the early years of the loan.

Kansas City mortgage rates

Requirements for Conventional Home Loans:

What is the Minimum Down Payment for Conventional Loans?

The conventional loan down payment is 3 percent (3%) of the home’s purchase price. If you are first-time home buyers and meet the income limitations, you can enjoy discounted mortgage insurance.

The mortgage insurance can be removed after there is sufficient equity (unlike FHA). You are considered a first-time homebuyer if you have not owned real estate in the last three years.

Conventional vs. FHA Loans

Eligible sources for the 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 on Conventional loans. Please feel free to contact a Kansas City Loan Officer to learn more information about the underwriting process.

Guide to Conventional loans

2024 Maximum Loan Amount

Below are the maximum FHFA (Federal Housing Finance Agency) conforming loan limits for Kansas City. Or find the Missouri conforming loan limits by county and Kansas conforming loan limits by county.

$766,550 for a one-family property
$981,500 for a two-family property
$1,186,350 for a three-family property
$1,474,400 for a four-family property

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

Jumbo vs. Conventional home loans

Minimum Credit Score

Conventional mortgages are a good choice for borrowers with a credit score of 620 or higher. However, there is “risked-based” pricing (See LLPA below). The interest rate depends on your middle FICO score and the size of your down payment.

FHA (Federal Housing Administration) may be a better option if you have troubled credit history. Contact a Kansas City Loan Officer to determine which home loans are best for you.

Mortgage Refinance

You can refinance conventional loans, which can help you pay off your home sooner, lower your monthly payments and even put your home equity to good use. There are several options to consider when refinancing:

A “rate and term” refinance improves loan terms or reduces the term to accelerate loan payoff. A “cash-out refinance” to obtain money for large purchases such as home improvements, cars, or to reduce credit card debt. The is refinance to take equity out of your home.

Learn more about a mortgage refinance

Private Mortgage Insurance (PMI)

When putting less than 20% down payment requires PMI on conventional mortgages. 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 payments than an FHA loan.

Other loans 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 the cheapest for your situation.

Debt-to-Income Ratios

A debt-to-income ratio (DTI) is your total mortgage payment and monthly debts divided by your gross income. This Debt-to-income ratio is one-way Kansas City mortgage brokers 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, employment 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 in Kansas City

Many types of properties are eligible for financing, for example:

  • Single-family homes (Detached homes)
  • Planned Unit Developments (PUDs) typically comprise 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

Local Success Stories

Hear from Kansas City residents who have successfully navigated the conventional loan process with Metropolitan Mortgage. Their customer experiences underscore the practical benefits and potential savings achieved through our tailored lending solutions.

Explore all the available loan programs

VA loans (department of veterans affairs)*
FHA loans *
USDA loans *
Jumbo loans
Renovation loans

* Government agency backed loans

Have Questions? Speak with a overland park mortgage lenders to learn more about conventional loans. Call our Kansas City or Overland Park location today at 913.642.8300.

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