A conventional mortgage is a great option for prospective homeowners, particularly if you are looking to purchase an investment property or a second home. Conventional loans, defined by consumerfinance.gov as a loan that is “not part of a government program,” may have less strict guidelines for borrowers than VA or FHA home loans. These and other great reasons to take out a conventional home loan may leave you wondering what you need to qualify. Fortunately, The Federal Savings Bank’s free Learning Center is here to give you a quick primer on the financial requirements for a conventional loan.
In order to secure an approval for a traditional or conventional mortgage, you will need to demonstrate that you meet the lender’s requirements. That includes demonstrating your ability to repay the loan. Your loan officer may ask you to provide copies of paystubs and W-2s, or your tax returns if you are self-employed. Your lender may also contact your employer to verify your employment history and probability of future employment.
As with many other types of consumer credit, you will likely need to consent to a credit check (sometimes called a “hard pull”) when you apply for a conventional mortgage. Many lenders have credit score/FICO score requirements for their conventional home loans, and they might be more strict than those of government-backed mortgages.
If you are interested in a lower monthly payment on your traditional mortgage, the easiest way is to put more money down at the time of purchase. A higher down payment means a lower initial loan amount, meaning less interest will accrue over the life of the loan and you will save the difference. A lower loan-to-value ratio from a significant down payment might even exempt you from any monthly mortgage insurance premium that the lender might otherwise require.
A trusted loan officer at The Federal Savings Bank can help you evaluate the many home loan options available to you, conventional or otherwise. Whether you are seeking to refinance, purchase, or build your home, we stand ready to help you secure a better future for your family.
Subject to credit approval. Terms and conditions may apply. Property insurance is required on all loans secured by property.