Conventional Mortgages

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For many years, conventional loans were considered the standard when buying a house. A conventional loan simply means that, instead of being insured by a government agency, your loan is entirely backed by a private entity, usually a bank or credit union. Because the lender takes on a greater risk, conventional loans often have stricter requirements than government loans like an FHA or VA, but if you have good to excellent credit and a significant down payment ready, a conventional loan may be the best option for you.

For many years, conventional loans were considered the standard when buying a house. A conventional loan simply means that, instead of being insured by a government agency, your loan is entirely backed by a private entity, usually a bank or credit union. Because the lender takes on a greater risk, conventional loans often have stricter requirements than government loans like an FHA or VA, but if you have good to excellent credit and a significant down payment ready, a conventional loan may be the best option for you.

Requirements

Credit

Banks prefer to give conventional mortgages to buyers who have already proven that they can be trusted. While there is some wiggle room, a good rule of thumb is that you will need a credit score of at least 620 to qualify, but in Lone Tree’s real estate market, you’ll need around a 760 to get the best interest rates.

Requirements

Credit

Banks prefer to give conventional mortgages to buyers who have already proven that they can be trusted. While there is some wiggle room, a good rule of thumb is that you will need a credit score of at least 620 to qualify, but in Lone Tree’s real estate market, you’ll need around a 760 to get the best interest rates.

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Debt to Income Ratio

While your credit score determines your interest rate, your debt to income ratio will determine the maximum value you can borrow. Every lender is a little bit different, but in general, the total monthly payment for your mortgage, student loans, car payments, credit card debt, and any other monthly debt payment will need to stay below 43% of your monthly income.

Debt to Income Ratio

While your credit score determines your interest rate, your debt to income ratio will determine the maximum value you can borrow. Every lender is a little bit different, but in general, the total monthly payment for your mortgage, student loans, car payments, credit card debt, and any other monthly debt payment will need to stay below 43% of your monthly income.

Down Payment

A common misunderstanding is that you need a full 20% down to qualify for a conventional mortgage, but that’s not always true. We have programs that can get you into a home with as little as 3%, 5%, or 10% down.

Usually with less than 20% down, you’ll need to pay a monthly mortgage insurance premium, but we also have a unique program where the lender will actually pay this premium on your behalf. This can result in a significantly lower monthly payment.

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Should I Get a Conventional Loan?

In general, a conventional loan is best for someone who:

  • Has a credit score of at least 660 and preferably over 700
  • Has a debt to income ratio of 43% or lower
  • Has a 20% down payment

Even if you don’t meet all of these criteria, one of our unique conventional loan programs may be the perfect option to get you into your new home. If you’re ready to find out more, get in touch with us or get pre-qualified and we can tailor a program that’s right for you.