Are you planning to purchase your first house? Are you looking for the requirements necessary to obtain a mortgage loan? Are you seeking tips to ensure approval? If you do, then you are on the right page. These days, buying a house is made easy through different mortgage loans. As long as you comply with requirements, then you can quickly get approved.
There are many types of mortgage loans to choose from. We have popular brands such as the FHA loan, VA loan, Texas jumbo loan, USDA loan, and the conventional loan. It can be overwhelming to choose one since each of them have unique features. Take your time to decide. Do not rush. You can still prepare your requirement even without determining which one to go for. The four basic requirements for all mortgage loans are the same. Only the criteria will change.
A Good Credit
The primary requirement for basically every mortgage loan you will apply for is a good credit. For most mortgages, the minimum requirement is 640. However, some require higher, sometimes at 680. On the other hand, when it comes to government-insured loans, the minimum is often at 580. You also need to have a good credit history. A bad credit report stays on record for seven years. Thus, it is better not to have a bad credit record at all since it could significantly affect your loan applications. If you have a bad credit report, the best you can do to convince lenders is to make sure that all your payments are current. Make your complete payments on time.
A Stable Job
You will also need to have a regular and stable job or a business. If you are working, lenders will allow you to take a loan if you have at least two years of consistent and continuous employment with your current company. For some, though, they will allow you to have different employers as long as it is within the same industry. If you have a business, you will need to ask your lender since the required time varies, but mostly it is at least one year.
A Steady Source of Income
Your finances matter as much as your job does. Even if you have a stable job but if your funds are not right. You might not get approved. Your lender will check both your income and your expenses. They will check on your cash flow too. Therefore, it is best to ensure that you have no negative or zero balance in your bank accounts. It is also essential that your credit card payments are on time, and there are no delinquencies.
Enough Down Payment
When it comes to typical mortgages, the required down payment is at twenty percent. However, there are many lenders these days that offer lower down payments. Mostly, for conventional loans, they offer ten percent wherein FHA loans offer 3.5 percent. If you have enough, though, it is best to put down as much as you can. This way, you will have a lower principal to pay off. It also means lower interest and lower monthly payment.