Conventional Home Loans

Our best advice is to talk to us early! Buying your first home is a big step to look forward to, and it can also feel a little overwhelming. At The Bank of Missouri, our experts are here to help set you up for success.

A couple of good starting points: 

• Take a look at your finances. Two important things are your credit score and your debt-to-income ratio (how much money you owe versus how much you make). Your lender will review your current numbers with you. By reviewing early, you may be able to make changes over time that have a positive impact. 
• Look at the average prices for homes that meet your needs and see how that fits your budget. This can also help you decide how much you want to have saved for a down payment. Ask a mortgage lender and a realtor to help you with this step. Remember, it’s totally okay to call us well before you’re ready to buy. When we connect early, we’re able to help make sure you’re all set when the time is right! 

The Bank of Missouri can provide a pre-qualification at no cost to you. We’ll review your credit report plus some basic info you provide. Then, we’ll give you an idea of the size home loan you could qualify for. It’s an easy way to start thinking about what mortgage and payments fit your budget.

You may be able to put down as little as 3% to 5% of the purchase price. If you pay less than 20% down, you will have a monthly insurance fee called PMI (private mortgage insurance). You will pay this fee until you have built up 20% equity (or ownership) in your house.

The good news is there are ways to buy without 20% down. Whether that’s using PMI on a conventional home loan or looking at government-backed loans that may let buyers put 0% down.

By far, most borrowers choose fixed-rate mortgage loans for the benefit of having a consistent loan payment. However, there are times where an adjustable-rate mortgage may be a good fit. Adjustable-rate loans typically have an initial period when the rate does not change. If you plan to move before the initial period ends, an ARM may be a good option.

This is an important decision and one that we will spend time reviewing with you. We’re here to help! 

At The Bank of Missouri, we are committed to reviewing the options with you. Your lender will get to know you and your needs and goals. We’ll discuss the pros and cons of each option and answer any questions you have.

In general, government insured or guaranteed loans can be a good fit if you have less-than-perfect credit or need 100% financing. Or if you have unique qualifications, such as VA loans for eligible veterans. 

But they also come with certain restrictions. For example, the home may need to meet minimum property standards for safety and soundness. This may make it more difficult to purchase a fixer-upper. Or it may extend the time needed to purchase the home if the seller must make repairs to meet the requirements.

Conventional loans are typically the most flexible, coming with less restrictions. They can be a great option for those with a strong credit score and the ability to make a down payment of at least 3% to 5%.