What makes the conventional mortgage a popular option for MA home buyers is the range of options it presents. A conventional loan can be either a conforming or non-conforming product depending on how it fits into Fannie Mae or Freddie Mac’s underwriting guidelines or loan limits.
Fixed: The payment is fixed for the duration of the loan.
ARM: Adjustable Rate Mortgage can be fixed for a variety of time periods before it goes adjustable. Some of the more popular products are the 3/1ARM, 5/1ARM, & the 7/1ARM. The first number is the length of time it is fixed for. The 1 is the amount of times the loan can adjust in a year once it moves to it’s adjustable period.
Interest Only: An IO loan, as its commonly referred to as, requires that the home owner only pay the interest on the loan. The actual loan balance does not decrease , like a traditional amortized loan. This loan is not recommended for most borrowers but can be beneficial to investors, or a borrower who gets paid in lump sums and is disciplined with their finances.
The conventional loan limits in MA are broken down by county just like they are for FHA
County | 1 Unit | 2 Units | 3 Units | 4 Units |
Barnstable | 417,000 | 533,850 | 645,300 | 801,950 |
Berkshire | 417,000 | 533,850 | 645,300 | 801,950 |
Bristol | 426,650 | 546,200 | 660,200 | 820,500 |
Dukes | 625,500 | 800,775 | 967,950 | 1,202,925 |
Essex | 465,750 | 596,250 | 720,700 | 895,700 |
Franklin | 417,000 | 533,850 | 645,300 | 801,950 |
Hampden | 417,000 | 533,850 | 645,300 | 801,950 |
Hampshire | 417,000 | 533,850 | 645,300 | 801,950 |
Middlesex | 465,750 | 596,250 | 720,700 | 895,700 |
Nantucket | 625,500 | 800,775 | 967,950 | 1,202,925 |
Norfolk | 465,750 | 596,250 | 720,700 | 895,700 |
Plymouth | 465,750 | 596,250 | 720,700 | 895,700 |
Suffolk | 465,750 | 596,250 | 720,700 | 895,700 |
Worcester | 417,000 | 533,850 | 645,300 | 801,950 |
PROS
- Wider variety of mortgage products
- Lower mortgage insurance rates than government loans
- Mortgage insurance can be rolled into the interest rate
- Loan be utilized for non-owner or investment properties
- Easier appraisal standards
- Can have multiple conventional loans at one time
CONS
- Tighter underwriting guidelines
- Less flexibility with DTI (debt to income ratio), & gifting down payment funds
- Lower loan limits
- Higher credit score requirements
- Higher down payment requirements