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:

• 30 Day’s Pay Stubs
• 2 Years of W-2’s
• 2 Years Tax Returns If Self Employed
• An Offer Letter, If Not Yet Started.

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.

• HomeReady – It allows non-borrowing members of the household to help the actual loan applicant become approved. Lenders will usually consider the income of mothers, fathers, extended family, and even non-married household members, even when they aren’t officially on the loan file.
• Conventional 97 – As the name implies, it allows home buyers to put a 3% downpayment on the home and is available to applicants of any income level and location. The main drawback of this loan is a higher interest rate and also having to have mortgage insurance, which can increase the cost of the mortgage payments, compared to having even 5-10% of the loan amount.