Fixed rate mortgages are a popular choice among homebuyers due to their predictability and stability. In this blog post, we will delve into the details of fixed rate mortgages, including their history, qualifications, and key factors you need to know when considering this loan program.
History of Fixed Rate Mortgages
Fixed rate mortgages have a long and storied history. They gained popularity in the United States during the early 20th century when homeowners sought more stable and affordable options. In 1934, the Federal Housing Administration (FHA) introduced the first fixed rate mortgage, offering homeowners the security of a consistent interest rate over the life of their loan.
Understanding Fixed Rate Mortgages
Fixed rate mortgages are a type of home loan where the interest rate remains constant throughout the loan term, typically 15, 20, or 30 years. Here are some essential facts about fixed rate mortgages:
1. Qualifications:
Credit Score: Lenders often require a minimum credit score of 620 for conventional fixed rate mortgages.
Income: A stable source of income is necessary to qualify for a fixed rate mortgage.
Debt-to-Income Ratio (DTI): Typically, your DTI should not exceed 43% to qualify for a fixed rate mortgage.
Eligibility: U.S. citizens, permanent residents, and certain non-resident aliens are eligible for fixed rate mortgages.
2. Minimum Down Payment:
The minimum down payment for a conventional fixed rate mortgage is typically 3% to 20% of the home's purchase price. However, a 20% down payment can help you avoid private mortgage insurance (PMI).
3. Loan Maximum:
Conventional fixed rate mortgages have loan limits, which can vary by location. As of my last knowledge update in September 2021, the maximum conforming loan limit was $548,250 for most areas, but it's important to check the current limits in your area.
4. Use of Property:
Fixed rate mortgages can be used to purchase primary residences, second homes, and investment properties.
Are you interested in exploring your options for a fixed rate mortgage? Wondering if you qualify? Don't hesitate to reach out for a consultation. Our team of experienced mortgage professionals is here to assist you every step of the way. Click here to book a consultation or take our client survey to determine which loan program suits your needs best.
