About Conventional Loans
Conventional loans are a popular mortgage option for borrowers with strong credit and stable income. These loans are not backed by the government, offering flexible terms and competitive interest rates. They are ideal for homebuyers looking for lower overall borrowing costs and those who can meet the required credit and down payment standards.
Key Points
Minimum down payment: 3% (for qualified borrowers)
Minimum credit score: 620
Debt-to-income (DTI) ratio: Typically up to 45% (can be higher with strong compensating factors)
Loan limits: $766,550 (for most areas in 2024, higher in high-cost areas)
Private mortgage insurance (PMI) required if down payment is less than 20%
Steps to a Successful Conventional Loan
Check Your Credit Score – Ensure your credit score is at least 620 (higher scores get better rates).
Determine Your Budget – Use a mortgage calculator to estimate how much home you can afford.
Save for a Down Payment – A minimum of 3% is required for first-time buyers, but 20% avoids PMI.
Get Pre-Approved – A lender will assess your financials and issue a pre-approval letter.
Find Your Home & Make an Offer – Work with a real estate agent to secure your ideal home.
Complete Loan Application & Underwriting – Submit all financial documents, including tax returns and pay stubs.
Get a Home Appraisal & Final Loan Approval – Ensure the property value meets loan standards.
Close on Your Loan – Sign the final paperwork, pay closing costs, and receive your keys!