CONVENTIONAL LOANS AREN'T JUST FOR BUYERS WITH 20% DOWN
When people hear “conventional mortgage,” they sometimes assume they need perfect credit and a 20% down payment.
That's not necessarily the case.
Depending on your finances and the loan program you qualify for, conventional financing may allow you to purchase a home with considerably less than 20% down.
The important part is figuring out which financing option makes the most sense for your situation.
WHAT IS A CONVENTIONAL LOAN?
A conventional mortgage is a home loan that isn't insured or guaranteed by a government agency like FHA or VA.
Because there are different conventional loan programs and qualification requirements, your lender can help determine what options are available based on your credit, income, debt, down payment and other factors.
DO YOU NEED 20% DOWN?
Not always.
Some qualified buyers may be eligible for conventional financing with a much smaller down payment.
Putting 20% down can have advantages, but don't automatically assume you need to save that much before talking with a lender.
You may have options sooner than you think.
WHAT ABOUT PMI?
If you purchase a home using conventional financing with less than 20% down, private mortgage insurance — commonly called PMI — may be required.
PMI increases the monthly cost of the mortgage, so it should be included when you're determining what monthly payment you're comfortable with.
One potential advantage of conventional financing is that PMI may eventually be removed when certain requirements are met.
CONVENTIONAL VS. FHA
Neither loan is automatically “better.”
FHA financing may make sense for one buyer while conventional financing may be the stronger option for another.
Credit profile, available cash, monthly payment, mortgage insurance and the property itself can all influence which option makes more sense.
That's why I wouldn't choose a loan type simply because someone online said it's the best one.
YOUR APPROVAL PRICE ISN'T YOUR BUDGET
This is something I believe buyers should understand regardless of their financing.
Just because you're approved to purchase a $350,000 home doesn't mean spending $350,000 is necessarily comfortable for you.
Think about the actual monthly payment — including principal, interest, property taxes, homeowners insurance, applicable mortgage insurance and other housing expenses.
The goal is to own the house without the house owning your paycheck.
START WITH THE NUMBERS, THEN START THE HOME SEARCH
Before we spend weekends touring homes, I want you to have a realistic understanding of your buying power.
Once you've talked with a lender and established a comfortable price range, we can build your home search around properties that actually fit your goals.
And if conventional financing isn't the best option?
That's okay.
We can look at the other financing possibilities available to you and build the strategy from there.
READY TO START YOUR HOME SEARCH?
If you're considering buying in the St. Louis or St. Charles area, you don't have to have everything figured out before contacting me.
We can start with where you are today and determine the next step.
Micadez Favors, REALTOR® | MRP
EXIT Elite Realty
Let me do you a Favor.
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