If you’re planning on buying a house, there’s a good chance that you’ve already heard of conventional loans before. But what exactly are conventional loans? And what requirements do you need to apply for one? Read on to find out.

What is a Conventional Loan?

Unlike government-insured loans, conventional loans are simply **private mortgage insurance**offered by private entities, including credit unions, banks, and other financial institutions. They also require relatively high credit score requirements and a downpayment.

On top of this, conventional loans run for up to 30 years. These lenders will also usually look through your credit score and history to determine your fixed rate of interest. Generally, you’ll pay less interest for your loan when you have better overall credit.

You may come across different types of conventional loans as you compare lenders and mortgage options. Here are some of them:

• Conforming Loan
• Jumbo Mortgage Loans
• Portfolio Loan
• Subprime Loan
• Amortized Loan
• Adjustable Loan

What Requirements Do You Need?

Getting a conventional loan requires additional documents that would allow lenders to check whether you can afford their monthly payments and downpayment. Below are some of the common requirements you may need to provide:

1. Assets

The first requirements you need are your investment account statements and bank statements. These documents can tell the lenders whether you have enough funds for their downpayment and closing costs. They also show if you have cash reserves on hand.

2. Employment Verification

Other than your assets, lenders will also check if you have a stable work history. They may call your employer to verify your salary and whether you’re still employed with them. On the other hand, self-employed borrowers would need to provide additional documents regarding your business and income.

3. Proof of Income

You’ll also need to provide your proof of income. This may include but not limited to your pay stubs, tax returns, quarterly statements, and bonuses and alimony.

4. Other Documentation

Additional documents you may need include your driver’s license, Social Security number, and signature to verify your identity and get your credit report.

Final Thoughts

Regardless of the type of conventional loan you’re applying for, it’s always good to check whether you fit the requirements. That would ensure a hassle-free transaction and mortgage later on.