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    Minimum Mortgage Requirements of this 2020


    If you have ever wondered, “ Do I qualify for a Mortgage Loan?.” Well at 2020 Minimum Mortgage Requirements has all the updated requirements. Here are the most common loans requirements we got from their. 

      A FHA loan is one of the easier loans to get approved for. The reason being is it has provided mortgage insurance. Often lenders are able to give better rates and terms because FHA is backing up 90% of the mortgage. With this loan you’ll only need to put a minimum of a 3.5% for your down payment. You’ll need your debt to income ratio at 31% for your front end and 43% for you back end. Your front end DTI considers only your house related costs and your back end involves only your monthly debt. You are required to live in the residence for a year regardless of what type of home. You need proof of employment and a steady income, and you are required to have mortgage insurance regardless of what you put down for a down payment. You actually pay two mortgage insurance premiums on a FHA loan. The first one is the upfront mortgage premium which is due at closing and then the monthly mortgage insurance which you pay every month for the life of the loan.

    A conventional 15 year or 30 year loan has stricter qualifications but that comes with some longer term benefits. Sometimes you can put a down payment as low as 3% and qualify, there will be required mortgage insurance if you do and there are income limits but it is possible. With a conventional loan you aren’t required to have mortgage insurance so long as you put 20% on your down payment. One thing that is different about about a conventional loan is if you are paying mortgage insurance on a conventional loan once you pay 78% of the original value lender must stop charging mortgage insurance. Lenders will require proof of employment and will look much more closely at your past two years of employment. Your credit score needs to be much higher than an FHA loan. It should be around 620 to 640. Your debt to income ratio have been allowed to be as high as 50% in select cases and many mortgage companies are now requiring a credit score of 700 or higher for higher debt to income ratios.

    A Veterans Affair Loan benefits active-duty military personnel, veterans, reservists and their families. You need a VA Loan certificate of eligibility to be able to apply for this loan, and this can be applied for through a lender, online or by sending a completed form by mail. VA Loans have no required down payment. VA loans don’t have a PMI fee however there is a funding fee which is similar, which is charged at closing and is usually financed on top of the loan amount. The amount of the funding fee will depend on whether the veteran is using their eligibility for the first time or not. Also if the veteran has a disability due to their military service the fee can be waived. VA loans don’t have a minimum requirement of a credit score but most lenders have a minimum cut off at 620, The VA loan only requires the lender to review the loan to make sure the veteran will be able to pay off the loan. There’s no minimum income but applicants still must show proof of income. It is recommended to not have a DTI higher than 41%. Although they can be approved by VA Lenders because they also look at residual income. 

    Bonus Tip!

    Before you even apply, have these documents with you: A signed purchase agreement with the seller; pay stubs for the last 30 day; Tax returns going back 2 years; Pension Statements; Social Security or Disability income award letters, if you have them; W-2’s for all employment the past 2 years; Bank Statements going 60 days back; Proof of Homeowner insurance; Documents of any other source of income; Securities documents like stocks and bonds or life insurance policies; 1099 form if you work for yourself; and proof of bonus income. 


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