Killeen Conventional Home Loans

You’ve probably heard of conventional home loans, but you may not know what they are. Conventional loans are not government-backed and are a popular mortgage option for many homebuyers because they offer various benefits, such as low-interest rates, flexible repayment terms, and low down payment requirements.

Conventional loans could be a good option if you are considering buying a home in Killeen, TX. 

Conventional Loan Requirements

Mortgages that are not government-backed are known as conventional loans. However, a private lender is the one who issues it. And because of this, conventional loans often have stricter requirements than other types.

– Assets and Reserves

A conventional loan requires you to have enough assets and cash reserves to pay for your down payment, closing costs, and any unexpected expenses that may come up during the home-buying process. To prove so, you need to present bank statements of your checking, investment, or savings accounts.

Unfortunately, the downside to a conventional loan is that you are on the hook for expenses out of your pocket. So, we recommend you ensure you are set with cash for closing costs or haggle who will shoulder them.

In addition to the funds for closing, you should also show your asset reserves and provide the following asset documentation:

• Last two months’ bank statements;
• Most recent retirement account statements, 401k, IRA, etc. 

– Credit 

A strong credit score is vital to qualify for a conventional loan. We will look at your credit report and credit score to get an idea of your financial history and see how likely you are to repay your loan on time. A higher credit score indicates that you are a lower-risk borrower, which could result in a loan with a cheaper interest rate.

Remember that the minimum credit score for a conventional loan is 620, but if you have a lower credit score, it may be best to consider FHA loans instead.

– Employment 

We might call your current employers to verify that you are indeed employed and what position, if any. Self-employed applicants must also submit additional paperwork supporting their business income. Meanwhile, a letter from the CPA who prepared the last two years’ tax returns should suffice but is only necessary until we have confirmation of credentials via other means.

– Income

Income is considered the bread and butter of any mortgage application. After all, a lender wants to see that you have the capacity to repay your loan. The following documentation is usually requested as part of your application:

• W-2s for the last two years;
• Pay stubs for the last 30 days;
• 1099s for the previous two years;
• Business and personal tax returns in the last two years plus year-to-date profit and loss statements for self-employed borrowers;
• Final divorce decree copy plus social security benefits letter if these are applicable.

Conforming Loan Limits

For your loan to be considered a conventional loan, it must fall within the maximum conforming loan limits regulated by the Federal Housing Finance Agency to be acquired by Fannie Mae and Freddie Mac.

For 2022, the conforming loan limit for a one-unit property is $647,200, depending on where you live in the United States. If your area has high living costs as Killeen does, then be sure to contact our Capital Home Mortgage experts to learn about any changes that may have happened since limits change yearly.

Apply for a Conventional Home Loan in Killeen

Capital Home Mortgage is here to help you every step of the way. We have a team of experienced mortgage professionals who can answer any questions you may have and guide you through the loan process.

Call us at (254) 213-7343 to get started with a no-obligation quote. We look forward to providing your next Conventional home loan in Killeen.