One of the most challenging aspects to consider when purchasing a home is how much money to save and spend on a down payment. Many people wonder how much home they can afford and if they have saved enough money for a sufficient down payment. It has often been said that you need to save for a 20% down payment in order to buy a house, however, if you are unable to afford that amount, you can still obtain a mortgage with great rates with a 15% down payment. If you are interested in learning more about your mortgage options with a 15% down conventional loan in the areas of Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, contact Foundation Mortgage. Our loan specialists can help determine the best financing option for your situation.
What Is a Conventional Loan?
Conventional loans are backed by private lenders rather than insured by the government, which allows them to offer borrower’s great benefits, such as flexibility with terms and low interest rates. Since conventional loans do tend to pose more risk to lenders because they are not compensated by the government in the event of a borrower default, they have stricter requirements than non-conventional loans like VA or FHA mortgages, and require private mortgage insurance, (PMI), payments. Even if you cannot make a 20% down payment, you can still obtain a lower interest rate by paying 15% down. Essentially, the higher your down payment, the lower your monthly mortgage costs will be. Even though you will have to pay for private mortgage insurance with a 15% down payment, the cost won’t be required for the entire duration of the loan because once you have 78% equity built up in your home, PMI is no longer required.
15% Down Conventional Loan Application Requirements
There are certain qualifying requirements you must consider when applying for a conventional loan, including understanding your credit score and the monthly amount you spend towards your debt. A credit score of 620 or higher is ideal, and if you have an even higher credit score, you will be able to obtain more favorable interest rates. Lenders usually require a debt-to-income ratio, (DTI), of 45% or less. When applying for a conventional loan, be prepared to provide necessary documentation, such as proof of income and employment. Additionally, you will be required to pay private mortgage insurance, and must live in the home as your primary residence.
Mortgage Assistance for 15% a Down Conventional Loan
If you are trying to decide how much money to spend on your home down payment in the regions of Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, Foundation Mortgage can help. Contact us today to get help applying for a 25% down conventional loan.