Must be 620 or higher. The interest rate and mortgage insurance premiums (if applicable) on a conventional loan is adjusted based on credit score.  As a general rule, the lower the credit score, the higher the interest rate and mortgage insurance premiums will be.

Typical down payment requirements for a Conventional mortgage are 5%. However, there are conventional programs (one from Fannie Mae) that only require a 3% down payment assuming eligibility. Without going into too much detail, the gist of this program is this:

a. This reduced down payment program is designed to make mortgages more accessible in underserved or low to moderate income areas. What does that mean for you? Typically, you would need to meet whatever income cap restrictions exist in your area for this program. Additionally, it would be difficult to use this 3% down payment program if you have another primary residence that won’t be sold prior to moving into your new home. The program has its own nuances; you can find a more complete breakdown of specific requirements at the following link:

1. 1. • Fannie Mae Home Ready

b. *There is a common misconception that this 3% down program is ONLY for first time home buyers. This is incorrect. Check with us and we can discuss this program in greater length.

Borrowers need to have stable income to qualify.

Mortgage insurance is not required if the borrower puts at least 20% down.  It is required when the borrower puts less than 20% down. See types of mortgage insurance below.  When the loan is reduced to below 80% of the original appraised value, the mortgage insurance can be waived at the borrower’s request. Otherwise, MI automatically drops off at 78% of the original appraised value.

Back End Ratio (otherwise known as “all payments to income ratio”) cannot exceed 50%. However, approval is based on automated underwriting analysis, which takes into account a variety of risk factors. Depending on work history, credit score, deposits in the bank, down payment, and more, YOUR maximum allowable DTI (debt-to-income) ratio might be different from someone else’s. That’s why we always encourage obtaining a pre-qualification letter from a lender BEFORE making assumptions and going to look for a home that you may or may not qualify for.