Conventional loans are one of the most common mortgage options for financing a home. These loans are not guaranteed by the federal government, but conform to guidelines set forth by Fannie Mae and Freddie Mac. Conventional loans tend to have stricter down payment and credit requirements than other loan options.
Eligibility standards vary by lender, but generally, borrowers can expect the following in order to qualify for a conventional loan:
For most income scenarios, Neighbors Bank will require copies of recent pay stubs, at least two months of bank statements, two years of federal tax returns if you have self-employment or rental income, and savings and retirement account statements. Additional documents may be required.
One of the biggest benefits of a conventional loan is that it comes with higher limits than other mortgage options. Conforming conventional loans go up to $484,350 in most areas, while nonconforming loans — also called “jumbo” loans — go much higher.
Other benefits of a conventional loan typically include:
The downside of conventional loans is that they typically have stricter credit and income requirements and also:
If you’re considering a conventional loan for your upcoming home purchase, there are four things you’ll want to keep in mind as you are applying for your mortgage:
Though conventional loans do have more strict eligibility requirements, borrowers with lower credit scores and a minimal down payment can still qualify. Talk with a Neighbors Bank home loan specialist to determine your eligibility.
Take the next step and apply for a conventional loan with Neighbors Bank. Your Neighbors Bank home loan specialist will guide you through the conventional mortgage process and determine what loan program is best for your unique financial situation. Contact us today.