Conventional Home Loans in Tennessee
Most prospective home buyers are familiar with conventional home loans. These mortgages are very popular and are provided by private lenders like banks and credit unions. However, since conventional loans aren’t backed by the federal government, they can be difficult to qualify for. That’s why you need Dash Home Loans.
If you’re hoping to secure a conventional loan in Tennessee, you must choose a mortgage lending process that’s fast, easy, and to the point. At Dash, we’ve cut the difficulties out of home financing in Tennessee by firing faceless loan processors and keeping everything in-house. As a result, you get approved with less stress and more smiles.
What’s even better? If you prequalify with the Dash Closing Guarantee, you’ll close on your dream house as expected. And if we hit a snag? We’ll pay up.
- What Is a Conventional Home Loan?
- Conventional Loan Requirements
- Benefits & Disadvantages of Conventional Loans
- Conventional Loan Limits
- Who Qualifies for a Conventional Home Loan?
- Types of Conventional Loans
- How to Apply for a Conventional Loan
What Is a Conventional Home Loan in TN?
A conventional loan is a mortgage that’s not guaranteed by the federal government. FHA loans, for example, are backed by the Federal Housing Administration. That means if the borrower (i.e. you) defaults, the government agency will pay a premium to the lender.
For comparison, conventional loans are offered by banks, credit unions, or mortgage lenders like Dash Home Loans. If you default, the lender will take a hit. Because of this, conventional loans are harder to qualify for, especially if you have less-than-stellar credit.
Typically, conventional loans have fixed interest rates. With a fixed interest rate, homeowners can expect consistent monthly payments during the lifetime of their loan. If a homebuyer prefers lower monthly payments to start, they can opt for an adjustable-rate mortgage instead.
Conventional Loan Interest Rates
If a borrower defaults on a Tennessee FHA loan, Tennessee USDA, or VA loan, the respective federal agency will pay a premium to the lender. But with a conventional loan, the lender is wholly responsible if and when default occurs. To account for this risk, conventional home loans in Tennessee often come with higher interest rates.
Your exact interest rate depends on your credit score, debt-to-income ratio, housing ratio, and other factors. Interest rates also vary from lender to lender. While other mortgage lenders in Tennessee settle for subpar loan terms, the Mortgage Coaches at Dash won’t stop looking until they find a phenomenal rate for you.
Conventional Loan Requirements in Tennessee
Tennessee conventional loans have strict application requirements. Though these requirements vary from lender to lender, you generally must meet these criteria:
- A credit score of at least 620. Credit score requirements depend on your lender, with some requiring a minimum score of 680. At Dash, we offer conventional loans to borrowers with a 620 or higher.
- A debt-to-income ratio of less than 36%. To calculate your debt-to-income ratio, divide your monthly debt payments by your gross income.
- No major credit report issues, like a foreclosure or bankruptcy.
- A minimum down payment of 20%. The standard down payment for a conventional loan is 20%. You can put down less; however, you must purchase private mortgage insurance.
Not sure if your finances are up to snuff? Reach out and we’ll put you in touch with a Mortgage Coach.
Benefits & Disadvantages of Conventional Loans
Let’s face it: Getting approved for a conventional loan in Tennessee can be difficult, especially if you have a shaky credit history and limited savings. And, if you do get approved, your loan terms may be less than savory (think: a high APR).
But there’s always a silver lining. Chiefly, Tennessee conventional loans afford higher lending limits, so you can purchase a home in a more expensive area. What’s even better? Unlike FHA loans, which always require PMI, conventional mortgages only require private mortgage insurance if you put less than 20% down.
FHA or Conventional Loan? Which Is Better?
Whether this is your first house or your fifth, you may be torn between an FHA loan and a conventional
loan. While each financing tool has its merits, the right one for you depends on your creditworthiness, savings account, and other factors.
For instance, if you have a derogatory mark on your credit report, an FHA loan could be better. After all, FHA loans are designed for borrowers with less-than-awesome credit. But if you’re working with an 825 FICO score and have loads of cash to put down, a Tennessee conventional home loan is probably the right choice.
Still debating FHA vs. conventional loans? Contact Dash online to speak with an expert Mortgage Coach.
Conventional Loan Limits for Tennessee Borrowers
How much house you can afford depends on your creditworthiness, income, and other factors. But private lenders must also conform to lending standards set by the Federal Housing Finance Agency. The conforming loan limit for 2023 is $726,200. In more expensive real estate areas, borrowers can get approved for loans up to $1,089,300.
Types of Conventional Loans for Tennessee Homebuyers
Are you a traveling nurse with heaps of credit card debt? Or maybe a retired pilot with limited income? No matter your circumstances, Dash Home Loans has a mortgage for you.
Not sure which works for you? Scroll through the conventional loans we offer, then get in touch with a Mortgage Coach at Dash. Just like Phillip Fulmer, your Mortgage Coach is here to help you make a touchdown and close on your dream home.
- Conforming Conventional Loan: Complies with standards set by the Federal Housing Finance Agency.
- Nonconforming Conventional Loan: Doesn’t comply with standards set by the Federal Housing Finance Agency.
- Tennessee Jumbo Loan: A nonconforming conventional loan that surpasses standard lending limits.
- Fixed-Rate Loan: Conventional loan option with fixed interest rates.
- Tennessee Adjustable-Rate Loan: Designed for borrowers who want to start with lower monthly payments.
- Conventional Renovation Loan: Perfect for homebuyers purchasing a fixer-upper.
- Subprime Loan: Financing offered at a higher interest rate to borrowers with shaky credit.
To apply for a Tennessee conventional loan, you’ll need to submit documents showing proof of your income, credit history, assets (e.g. cash, retirement investments, savings), and debts (e.g. auto loans, student loans, existing mortgages). Your lender will evaluate this information and then determine your eligibility.
When you work with Dash Home Loans, you’ll benefit from a fast and easy mortgage preapproval process. Our Mortgage Coaches will guide you through each step, offering friendly, five-star customer service along the way. Are you ready for a pleasant home financing experience?Apply now
Applying for a Tennessee conventional loan takes less than ten minutes. But lenders can take up to 90 days to process your paperwork.
Documents & Paperwork to Submit
To speed things along, it’s a good idea to gather important paperwork before applying for a conventional home loan in Tennessee. This documentation includes:
- Proof of Income: To verify your income, you’ll need pay stubs, two years of federal tax returns, W-2 forms, alimony and child support documents, and more. Are you self-employed? Prepare to show at least two years of employment in the same industry.
- Asset and Debt Verification: To evaluate your credit history, lenders will need to see proof of monthly debt payments, from auto loans to medical bills. They will also need to see proof of all assets like bank and investment accounts.
- Identification: To confirm your identity, you’ll need to submit a copy of your driver’s license or State ID. You’ll need to confirm your Social Security number too.
All of this information is needed to confirm your loan eligibility.
Tennessee Conventional Loan FAQs
If you have any questions about securing a conventional loan in Tennessee, our Mortgage Coaches are available to chat. Here are some common questions they receive regarding conventional loans.
What’s the difference between an FHA loan and a conventional loan?
An FHA loan is a mortgage that’s guaranteed by the federal government. It’s designed for borrowers with less-than-stellar credit and limited savings. For comparison, a conventional loan is offered by private lenders like banks, credit unions, and mortgage lenders.
What credit score do I need?
It depends. Private lenders typically require a 620 or higher, but you can lock in a better rate if your FICO score is above 740.
How is PMI calculated on a conventional loan?
PMI is a percentage of your original loan amount. This percentage depends on your lender but is normally between 0.22% and 2.25%.
How long does it take to close on a house with a conventional loan?
Conventional loans typically close in 30 to 45 days.
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