If you are in the market for a home loan, chances are that you have heard of a conventional mortgage loan. This type of loan is favorable to those who have a good credit score but not to those with a less than favorable credit rating. At Las Vegas Mortgage Lenders we do our best to help our clients understand the advantages and disadvantages of this type of loan. A conventional loan is not backed by a government agency, which is often why a higher credit score is required. A 20% down payment is also needed with a conventional home loan.
Facts About Conventional Loans
Various lenders offer conventional mortgages. These same places also offer government backed loans, such as VA and FHA loans. Most lenders consider a conventional loan as a high-risk loan since the government does not guarantee them. This helps to protect the lender in case the buyer defaults on the loan. A conventional loan may have harder requirements and higher rates than other types of loans. A larger down payment is required with a conventional mortgage loan, which is why some potential homebuyers steer clear of this type of loan, even if they can afford the down payment.
Understanding Your Credit Score and Mortgage Rate
When we are discussing the possibility of applying for a conventional loan with our clients, they often want to know what type of score they need. With a conventional loan, a minimum credit score of 620 is usually required. For most people, this isn't a problem. The problem is that if they are going to receive a good mortgage rate, they need a score of at least 740. This is often where people fall short and have to give up the idea of applying for a conventional loan.
Minimum Down Payment
Another serious factor when thinking of applying for a conventional loan is the amount of the down payment. This type of loan traditionally requires at least a 20% down payment. Recently, there is also the option of providing a 3% down payment program that helps them compete with the 3.5% minimum that is required for an FHA loan. The actual down payment amount differs based on the lender and the borrower’s credit history. There are additional fees that need to be considered in addition to the down payment, such as mortgage insurance, appraisal fees, and origination fees. Our loan officers will discuss all of these with you when you call for your complimentary consultation.
Why Rely on An Expert
While your friends and family may have good intentions and might be a good source of information about certain things, it is best to rely on the experts to address any issues related to conventional loans. Things in the real estate industry are rapidly changing. Since we keep up with the changes that occur, we are the best ones to help you get approved for a conventional home loan. We can provide you with the most up-to-date information that helps you make a well-informed decision.