Our conventional loan experts will guide you through the process and answer any questions you have. Our goal is to get the best loan for you and your life.
Contact us today to learn more and see if you meet conventional loan eligibility requirements.
If you’re considering a conventional loan for your home loan, take into account that you must have the following to be considered:
-5% down payment
Conventional loans are frequently preferred by home buyers and investment properties. A conventional loan is not insured by the federal government (like USDA, FHA and VA loans) and often proves to be the most advantageous loan option for those who qualify.
A conventional loan is privately backed and typically follows Fannie Mae and Freddie Mac guidelines, unlike the government-issued FHA, VA and USDA loans. Banks and other financial institutions issue a conventional loan and assume the inherent risk. Due to this fact, guidelines and eligibility requirements tend to be more stringent than some of the federal loan programs.
How do I qualify for a Conventional Loan?
Listed below are some of the general eligibility requirements of a conventional loan. Contact us to confirm eligibility, as every case can vary.
- Credit scores (Guidelines will vary)
- General income requirements: Your mortgage payment cannot exceed 31% of your monthly gross income. Your monthly debts (house, car, student loans, etc.) cannot be more than 45% of your monthly gross income.
- Down payment: Most loans require between 5% and 20% in a down payment. If the buyer is unable to supply the full 20% down payment, mortgage insurance may be an option.
- Documentation: You’ll need to provide proof of
- income stability
- job history
- residences from the past two years
- income tax filings
(This is a general list of paperwork that will need to be provided. Based on your income, assets, liabilities and profits, we may require more paperwork to complete your application)
Also, residency or visa paperwork may be required if you are not a U.S. citizen.
What to Expect When Applying for Conventional Loans
A conventional loan typically requires borrowers to have 5-20% of the home’s value as a down payment. Lenders who sell conventional loans will review debt-to-income ratios, monthly housing costs, credit scores, credit history and your income over the past several years. Anyone who has experienced bankruptcy and/or foreclosure within the past four years is eligible for a conventional loan but must have an excellent credit history. Most loan programs will review your application based on the Fannie Mae and Freddie Mac guidelines. However, the application proceeds quicker than FHA loans or VA loans since the government is not involved in the application process.
We will review the following items with you when applying for conventional loans:
- Your Employment: Are your income and employment steady?
- Down Payment: How much can you afford to put down?
- Credit History: Is your credit good? Do you have any late payments?
In addition, we can discuss your options regarding mortgage insurance and setting up an escrow account. This will allow you to have your mortgage insurance, homeowners insurance, and property taxes are taken out as part of your monthly mortgage payment.