Conventional Loans

·   Down payment: A larger down payment can help with approval and lower your monthly payment and interest rate. There are other options as well. There are conventional loans as low as 3% down for 1st time home buyers and 5% down for previous home owners. You will qualify as a 1st time home buyer if you have not had your name on title in the most recent 3 years.  

·   Private mortgage insurance (PMI): If you put down less than 20%, your lender will require PMI to protect them if you default. PMI increases your monthly mortgage payments but is currently 100% tax deductible just like the interest paid on your mortgage. (Different tax brackets may affect this)  

·   Debt-to-income ratio (DTI): Most lenders require a DTI of 50% or less. Lenders want to work with borrowers who have less debt and can more easily manage their monthly payments. Investors will sometimes give an approval to debt ratios on the higher end when the borrower has a lot of reserve money. That would include retirement, investment, and savings accounts. And this will almost always improve your rate and approval.   ·  Credit score: A minimum credit score of 620 is typical. 

 ·  Employment history: Lenders typically ask for at least two years of employment history to confirm that your income has stayed stable or increased. Attending college for your particular line of work also counts.   

·  Loan amount: The loan amount must be within local conforming loan limits. 2025 Conforming loan limits will be $802,650 most lenders are currently accepting this. (Excluding AK & HI)  

·  Credit history: A clean credit history with no recent bankruptcy or foreclosure within the last 2 years (chptr 13 dismissal) or 4 years (chptr 7 dismissal) is required, with re-established credit.   

· Primary residence: Conventional loans do require you to occupy the home as your primary residence. There are 2nd home and investment home options as well.