CONVENTIONAL LOANS Conventional Loans are available up to an amount of $359,650 for borrowers who conform to government requirements and therefore qualify for low rate loans. These loans normally offer the best of terms, resulting in the lowest overall cost.Conventional Loans can be structured in such a way that the borrower pays 20% or more as down payment without the additional cost of Mortgage Insurance, or 3, 5 or 10% down payment with varying levels of mortgage insurance. For further information regarding down payments, mortgage insurance, or other issues, contact a Plainsmen loan officer. There are principally three considerations in qualifying for a conventional loan: 1. CREDIT RATING In general, your credit history must show a history of meeting obligations without payments becoming 30 days late. Of particular importance is your performance in making mortgage or rental payments on your residence. Recent history is the most vital. Bankruptcies and foreclosures need to have been discharged for at least five years. Credit Reporting companies have developed a scoring system to evaluate credit ratings, and these scores are used by lenders as an important barometer in granting loans. A score of 620 is normally required to merit consideration, with 640 a much safer level. 2. GROSS INCOME A borrower's ability to repay is calculated by comparing his gross monthly income to his monthly obligations, which include payments on revolving debt as well as projected principal, interest, mortgage insurance, taxes and hazard insurance on the home. A ratio is calculated by dividing the sum of these monthly obligations by the gross monthly income. This ratio should be no greater than .36. In addition, the ratio derived by dividing the sum of monthly principal, interest, mortgage insurance, taxes and hazard insurance by gross monthly income should not exceed .28. 3. JOB and INCOME HISTORY A minimum of two years' history in the same or similar income and occupational environment is normally considered. Of course the more stability that can be demonstrated, the better. The above guidelines are not absolute requirements, but significant deviation from them represents a hurdle which must be explained and supported.