How to Know if a Conventional Loan Is Right for You
If a conventional loan seems appealing, you should first meet with one of our Minnesota home loan officers. They’ll explain everything from necessary qualifications to credit score and down payment requirements, benefits and drawbacks of this specific type of loan. You’ll also have to bring proper documentation such as pay stubs, tax returns, bank statements and more.
If you have a credit score above 620 and are able to put 10-20% down (or as little as 3% depending on your situation), you may be eligible for the benefits that come with conventional loans. These include:
Low interest rates
Flexible down payment options
Speedy loan processing
Options for loan term lengths on a fixed-rate mortgage
Reduced private mortgage insurance (PMI)
What Is a Conventional Loan, and How Can a Home Loan Officer Help Me in Minnesota?
Conventional loans are some of the most common loans in the mortgage industry. Instead of being funded by a government agency like FHA loans, conventional loans are funded by private financial institutions such as banks and then sold to government-sponsored groups like Fannie Mae and Freddie Mac.
A major differentiator between conventional loans and other types is that with conventional loans, your interest rate and qualifications are dependent on your credit score. Usually, conventional loans are reserved for those with a minimum credit score of 620. You’ll also want to put 20% down on your new home to avoid having to pay for private mortgage insurance (PMI), which protects the lender if you were to default on your loan. With a conventional loan, you can put down as little as 3% on your new home, though you will be required to pay for PMI.
The Minnesota consumer loan officers that make up Best Advantage Mortgage can walk you through the necessary requirements to find out if a conventional loan is the best option for you.