Is a conventional loan going to be the best fit for you? Check below to see if this is a good option. If you aren’t sure or just want our expert opinion, please reach out to us!
Conventional loans are growing in popularity thanks to lower rates and increasingly flexible guidelines. Depending on your situation, there are benefits to either fixed rates or adjustable rate loans.
A conventional loan is one that is not formally backed by any government entity such as FHA, VA, USDA. Rather, it is a loan that follows guidelines set by Fannie Mae and Freddie Mac, two agencies that help standardize mortgage lending in the US.
According to Ellie Mae, the average credit score for successful applicants for conventional loans is 720. Do you have a score that is lower? Don’t fret, the minimum accepted score for most conventional loans is 620. If you have a score lower than 620, we can look into other types of loans, such as FHA to assist you.
If you’re looking at a conventional loan, loan companies are stricter with income requirements. Generally, creditors want to see:
The lender will likely want to make sure that the property itself is a worthwhile risk, documented by an appraisal that values the home at it’s selling price. If the appraisal comes in below the selling price, that can be used as a bargaining chip to get the seller to lower the price of the home. On the flip side, if there’s a price war, you might be expected to cover the difference of the appraisal on top of the downpayment.
There are several great options available to assist people who might not have 20% down.