Your typical bank home loan
What are the credit requirements for a Conventional home loan?
To determine if you qualify for Conventional loans, your lender will look at a few different key factors:
- Your credit history and credit profile. Now depending on your circumstances and your lender, the credit standards may be flexible. A FICO score of 620 or above is very helpful though in obtaining an approval.
- Your income compared to your monthly expenses. The standard debt-to-income ratios are 28/36 for Conventional loans. These ratios may be exceeded with a variety of mitigating factors.
- The underwriter will look at your overall pattern for the last few previous years.
What’s the down payment required for Conventional loans and what will my interest rate be?
Your down payment and your interest rate will depend on a few different key factors. Obviously the interest rate will vary from person to person and will always be a case by case determination. Be sure to check with your lender about current interest rates.
- A Conventional loan requires the potential buyer to put at least 5% – 20% of the sales price in cash for the down payment and closing costs.
- New for 2015, you can now potentially be eligible for just a 3 percent down payment on a Conventional loan. Please ask your lender about the rules and restrictions regarding this change to the guidelines.
- Your interest rate will depend on your credit score.
- Interest rates are driven from Mortgage Backed Securities (MBS). These are typically referred to as “mortgage bonds”.
- Mortgage Backed Securities (MBS) will determine the range of the interest rates in which your interest rate will fall somewhere in that range.
If you have credit concerns, we have partners that are experts in getting our clients “mortgage ready” with their credit scores.