Conventional Mortgage

A conventional mortgage loan is backed and insured privately, instead of by a government agency. These loans are more flexible than FHA or VA loans, but have stricter eligibility requirements for borrowers and require a down payment for all loans. However, down payments for qualified borrowers can be as low as 3%.

Home buyers can use a conventional mortgage loan to purchase a one- to four-unit home, a condominium, modular or manufactured home as a primary, secondary or investment property.

On a conventional loan, we will consider a buyer’s debt-to-income (DTI) ratio, which is determined by calculating the projected housing costs and actual recurring monthly expenses. A buyer’s home expenses include: monthly loan payment applied toward principal and interest, property taxes, mortgage and homeowners insurance in addition to all monthly expenditures.

A FICO credit score of 640 and higher increases a borrower’s rate of approval and may reduce the loan’s interest rate.

Borrowers who have filed a Chapter 7 bankruptcy case can apply for a conventional mortgage after four years from discharge date, and those who have filed a Chapter 13 may apply two years after the re-establishment of an active credit profile.