What Is the Minimum Down Payment for a Conventional Mortgage?
by Admin
Posted on 11-06-2023 02:17 PM
Conventional loans are the most common mortgage type you’ll come across and often the usual starting point for many when shopping for a mortgage loan because they’re exactly what they sound like: conventional.
The process to obtain one requires a minimum down payment of 5%, for a maximum loan amount of $726,200. Also, seller concession is up to 3-9% of the sales price, while the private mortgage insurance (pmi) required is over 80% loan-to-value (ltv), or the amount of the mortgage compared with the value of the property. While all of that may sound convoluted, it is fairly, well, conventional.
Applying for a conventional loan in texas is simple once you have the right documents and personal information collected. You can fill out an applications at most banks and credit unions. These days, many lending institutions also allow you to apply online. Regardless of how you apply, you will need to prove you meet the minimum standards to qualify for the loan. In most applications, you will prove your loan worthiness by a mixture of your credit score, your down payment amount, and your financial ability to repay the loan. The lender will determine your financial ability with pay stubs to showing consistent employment, up to two years of bank statements, a list of assets, and a list of any debts you currently owe.
Conventional Loans Vs. Other Types of Mortgages
One of the first steps in choosing a lender is figuring out what type of mortgage you need. If you have blemishes on your credit report, like a bankruptcy, then an fha loan is likely to be easier to qualify than conventional loans. Other loans, such as usda and va loans, offer 100% financing with no down payment required -- though some lenders may have their own down payment requirements -- you’ll need to find a lender that offers these types of loans. The loan repayment term can also impact the lender you choose.
Most lenders offer 15-year or 30-year mortgages , but if you want a 10-year or a 40-year mortgage, your options will be more limited.
Conforming conventional loans will always have low, if not the lowest, rates available by product. They’re great programs for buyers who like a good deal on mortgages, want to have free reign over what they buy (meaning the house they purchase doesn’t have to meet a minimum standard) or simply don’t want to mess around with too much paperwork. However, these loans are generally only available to buyers with excellent credit. You’ll save some money by going with a conventional loan, but they’re not always the best choice for everyone. If you’re still undecided as to what kind of loan is best for you, just give us a call at (877) 763-6237 , or shoot us an email at hello@home.