Your Financial Superpowers Are About to Pay Off!
Conventional Loans: Not for the Faint of Heart, But Totally Worth It! 💪🏡 A conventional home loan follows the rules set by the cool kids at Fannie Mae and Freddie Mac. While it’s open to all, it’s a bit pickier than VA or FHA loans (like the class president who checks their homework twice). No government insurance means a higher risk for lenders, so expect the bar to qualify to be higher.
But don’t worry! If you’ve got good credit and a solid income, this loan could be your ticket to homeownership. Ready for a smooth, straightforward journey? Here’s what you need: 👇
- Have good to excellent credit! Credit scores of 660 and above is generally considered good to excellent. We have seen an AUS approval with credit scores as low as 600 but it does require additional review by management.
- Have a consistent and steady income
- Able to make a down payment of at least 3%
- Debt-to-income ratios below 50%
Best fit for a Conventional Loan
Conventional home loans are ideal for borrowers with good credit and money for a down payment
Required Debt-To-Income Ratio for Conventional Loan
Percentage of gross monthly income that is spent on debt payments, including mortgages, student loans, auto loans, minimum credit card payments and child support.
Costs associated with Conventional Loans
Lender fees, third-party fees, down payments, mortgage insurance and points can mean the borrower must show up at closing with a sizable sum of money out of pocket.
Pros of a Conventional Loan
A conventional home loan generally pose fewer hurdles than government-backed mortgages, which may take longer to process. PMI will automatically drop off after 22% equity. Minimum Down payments of 3%-5%. Typically, conventional loans have lower monthly mortgage insurance than FHA
Cons of a Conventional Loan
You’ll need excellent credit to qualify for the best interest rates. Rates are still usually higher than FHA, VA or USDA loans. Stricter guidelines on ratios and credit.