Austin Conventional Loans

Conventional Loans

The majority of loan programs available today are conventional loans. Unlike government loans, they do no have the strict property condition guidelines, but the property does have to be habitable. Down payments on conventional loans can vary from 0% down payment to 30% minimum down payment. There are so many programs available, that it is beyond the scope of this page to explain any of the programs. Conventional programs will fall into two main categories, conforming and non-conforming.

Conforming loans are loans that meet Fannie Mae underwriting standards for that particular type of loan. Conforming loans usually have lower rates than non-conforming loans. Conforming loan limits in the Austin area are as follows:
Single Family $359,650
Duplex $460,400
Triplex $556,500
Fourplex $691,600

Non-conforming loans are usually jumbo loans, or sub prime loans. Jumbo loans are loans that are higher than the above conforming loan limits. Sub prime loans are made to borrowers with a negative credit history, usually with a credit score of less than 560. Some people may not have a credit score due to no credit history. This is not necessarily considered bad credit. The interest rate for these loans can vary greatly. Sub prime lenders will sometimes make loans that require no down payment. Buyers that are forced to get a sub prime loan are encouraged to visit the Acorn Housing web site. Sub prime borrowers are the largest class of victims of predatory lending practices. Many sub prime loans have conditions that buyer’s are not aware of, such as pre-payment penalties.