Memphis
Conventional Loans

The Wendy Thompson Team offers conventional mortgage loans in Memphis, TN and all of the surrounding areas including Shelby County, Tipton & Fayetteville as well as Mississippi! Conventional loans come with their own pros and cons, and we will walk you through everything you need to know.

Conventional Loan Tennessee

Table of Contents

Table of Contents

What is a Conventional Home Loan?

The industry term “conventional loan” just means a loan that is NOT backed by the government. VA, FHA and USDA loans are examples of government backed or “non-conventional” loans.

 

Instead, conventional loans are backed by private lenders. These lenders are typically banks, credit unions, and mortgage companies. The exceptions to this rule are the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

The other term you’ll probably hear thrown about is “conforming” loans. That simply means the loan “conforms” to guidelines set by Fannie Mae (FNMA) and Freddie Mac (FLMC). These two government entities set mortgage lending guidelines, buy mortgages from lenders and sell them to investors.

Sounds complicated, right?

Memphis Conventional Loan Requirements

When considering a conventional loan for your home purchase in Tennessee, it’s essential to understand the specific requirements you’ll need to meet. These requirements help lenders evaluate your eligibility for this type of mortgage.

Here are the key criteria you should be aware of:

  • Credit Score: A good credit score is crucial when applying for a conventional loan. While requirements can vary slightly between lenders, a FICO score of 620 or higher is often the minimum.A higher credit score may lead to better interest rates and terms.
  • Down Payment: Conventional loans typically require a down payment of at least 3% to 5% of the home’s purchase price.
    The exact amount may vary based on your creditworthiness and the lender’s policies.
  • Income and Employment: Lenders will review your income and employment history to ensure you have a stable source of funds to make mortgage payments.Consistent employment and income verification are essential.
  • Debt-to-income Ratio (DTI): Your debt-to-income ratio is a critical factor. Most lenders prefer a DTI ratio below 43%, although some may accept higher ratios with strong credit profiles.DTI includes all your monthly debt payments (such as credit cards, car loans, and student loans) compared to your monthly income.
  • Private Mortgage Insurance (PMI): If your down payment is less than 20% of the home’s purchase price, you’ll likely need to pay for private mortgage insurance (PMI).PMI protects the lender in case you default on the loan.
  • Property Appraisal: An appraisal of the property you intend to purchase is required. This appraisal helps determine the home’s fair market value and its eligibility for the loan.
  • Residency and Citizenship: You’ll need to provide proof of U.S. residency or citizenship when applying for a conventional loan.
  • Loan Limits: Conventional loans have maximum loan limits that vary by county. In 2024, the conventional loan limits for Shelby County and surrounding areas are set at $766,550.

It’s important to note that while these are general requirements, each lender may have specific policies and guidelines.

Therefore, it’s advisable to consult with multiple lenders to find the one that best suits your financial situation and homeownership goals.

2024 Tennessee Conforming Loan Limits

These limits represent the maximum loan amounts for conventional mortgages in Tennessee in 2024, depending on the number of units in the property. It’s important to note that these limits can impact your eligibility and borrowing capacity when applying for a conventional home loan in the state. Understanding these limits is crucial for both homebuyers and lenders in the Tennessee housing market.

County state One UnityTwo-Unit Three-UnitFour-Unit
ANDERSON COUNTYTN$766,550$981,500$1,186,350$1,474,400
BEDFORD COUNTYTN$766,550$981,500$1,186,350$1,474,400
BENTON COUNTYTN$766,550$981,500$1,186,350$1,474,400
BLEDSOE COUNTYTN$766,550$981,500$1,186,350$1,474,400
BLOUNT COUNTYTN$766,550$981,500$1,186,350$1,474,400
BRADLEY COUNTYTN$766,550$981,500$1,186,350$1,474,400
CAMPBELL COUNTYTN$766,550$981,500$1,186,350$1,474,400
CANNON COUNTYTN$943,000$1,207,200$1,459,250$1,813,500
CARROLL COUNTYTN$766,550$981,500$1,186,350$1,474,400
CARTER COUNTYTN$766,550$981,500$1,186,350$1,474,400
CHEATHAM COUNTYTN$943,000$1,207,200$1,459,250$1,813,500
CHESTER COUNTYTN$766,550$981,500$1,186,350$1,474,400
CLAIBORNE COUNTYTN$766,550$981,500$1,186,350$1,474,400
CLAY COUNTYTN$766,550$981,500$1,186,350$1,474,400
COCKE COUNTYTN$766,550$981,500$1,186,350$1,474,400
COFFEE COUNTYTN$766,550$981,500$1,186,350$1,474,400
CROCKETT COUNTYTN$766,550$981,500$1,186,350$1,474,400
CUMBERLAND COUNTYTN$766,550$981,500$1,186,350$1,474,400
DAVIDSON COUNTYTN$943,000$1,207,200$1,459,250$1,813,500
DECATUR COUNTYTN$766,550$981,500$1,186,350$1,474,400
DEKALB COUNTYTN$766,550$981,500$1,186,350$1,474,400
DICKSON COUNTYTN$943,000$1,207,200$1,459,250$1,813,500
DYER COUNTYTN$766,550$981,500$1,186,350$1,474,400
FAYETTE COUNTYTN$766,550$981,500$1,186,350$1,474,400
FENTRESS COUNTYTN$766,550$981,500$1,186,350$1,474,400
FRANKLIN COUNTYTN$766,550$981,500$1,186,350$1,474,400
GIBSON COUNTYTN$766,550$981,500$1,186,350$1,474,400
GILES COUNTYTN$766,550$981,500$1,186,350$1,474,400
GRAINGER COUNTYTN$766,550$981,500$1,186,350$1,474,400
GREENE COUNTYTN$766,550$981,500$1,186,350$1,474,400
GRUNDY COUNTYTN$766,550$981,500$1,186,350$1,474,400
HAMBLEN COUNTYTN$766,550$981,500$1,186,350$1,474,400
HAMILTON COUNTYTN$766,550$981,500$1,186,350$1,474,400
HANCOCK COUNTYTN$766,550$981,500$1,186,350$1,474,400
HARDEMAN COUNTYTN$766,550$981,500$1,186,350$1,474,400
HARDIN COUNTYTN$766,550$981,500$1,186,350$1,474,400
HAWKINS COUNTYTN$766,550$981,500$1,186,350$1,474,400
HAYWOOD COUNTYTN$766,550$981,500$1,186,350$1,474,400
HENDERSON COUNTYTN$766,550$981,500$1,186,350$1,474,400
HENRY COUNTYTN$766,550$981,500$1,186,350$1,474,400
HICKMAN COUNTYTN$766,550$981,500$1,186,350$1,474,400
HOUSTON COUNTYTN$766,550$981,500$1,186,350$1,474,400
HUMPHREYS COUNTYTN$766,550$981,500$1,186,350$1,474,400
JACKSON COUNTYTN$766,550$981,500$1,186,350$1,474,400
JEFFERSON COUNTYTN$766,550$981,500$1,186,350$1,474,400
JOHNSON COUNTYTN$766,550$981,500$1,186,350$1,474,400
KNOX COUNTYTN$766,550$981,500$1,186,350$1,474,400
LAKE COUNTYTN$766,550$981,500$1,186,350$1,474,400
LAUDERDALE COUNTYTN$766,550$981,500$1,186,350$1,474,400
LAWRENCE COUNTYTN$766,550$981,500$1,186,350$1,474,400
LEWIS COUNTYTN$766,550$981,500$1,186,350$1,474,400
LINCOLN COUNTYTN$766,550$981,500$1,186,350$1,474,400
LOUDON COUNTYTN$766,550$981,500$1,186,350$1,474,400
MCMINN COUNTYTN$766,550$981,500$1,186,350$1,474,400
MCNAIRY COUNTYTN$766,550$981,500$1,186,350$1,474,400
MACON COUNTYTN$943,000$1,207,200$1,459,250$1,813,500
MADISON COUNTYTN$766,550$981,500$1,186,350$1,474,400
MARION COUNTYTN$766,550$981,500$1,186,350$1,474,400
MARSHALL COUNTYTN$766,550$981,500$1,186,350$1,474,400
MAURY COUNTYTN$943,000$1,207,200$1,459,250$1,813,500
MEIGS COUNTYTN$766,550$981,500$1,186,350$1,474,400
MONROE COUNTYTN$766,550$981,500$1,186,350$1,474,400
MONTGOMERY COUNTYTN$766,550$981,500$1,186,350$1,474,400
MOORE COUNTYTN$766,550$981,500$1,186,350$1,474,400
MORGAN COUNTYTN$766,550$981,500$1,186,350$1,474,400
OBION COUNTYTN$766,550$981,500$1,186,350$1,474,400
OVERTON COUNTYTN$766,550$981,500$1,186,350$1,474,400
PERRY COUNTYTN$766,550$981,500$1,186,350$1,474,400
PICKETT COUNTYTN$766,550$981,500$1,186,350$1,474,400
POLK COUNTYTN$766,550$981,500$1,186,350$1,474,400
PUTNAM COUNTYTN$766,550$981,500$1,186,350$1,474,400
RHEA COUNTYTN$766,550$981,500$1,186,350$1,474,400
ROANE COUNTYTN$766,550$981,500$1,186,350$1,474,400
ROBERTSON COUNTYTN$943,000$1,207,200$1,459,250$1,813,500
RUTHERFORD COUNTYTN$943,000$1,207,200$1,459,250$1,813,500
SCOTT COUNTYTN$766,550$981,500$1,186,350$1,474,400
SEQUATCHIE COUNTYTN$766,550$981,500$1,186,350$1,474,400
SEVIER COUNTYTN$766,550$981,500$1,186,350$1,474,400
SHELBY COUNTYTN$766,550$981,500$1,186,350$1,474,400
SMITH COUNTYTN$943,000$1,207,200$1,459,250$1,813,500
STEWART COUNTYTN$766,550$981,500$1,186,350$1,474,400
SULLIVAN COUNTYTN$766,550$981,500$1,186,350$1,474,400
SUMNER COUNTYTN$943,000$1,207,200$1,459,250$1,813,500
TIPTON COUNTYTN$766,550$981,500$1,186,350$1,474,400
TROUSDALE COUNTYTN$943,000$1,207,200$1,459,250$1,813,500
UNICOI COUNTYTN$766,550$981,500$1,186,350$1,474,400
UNION COUNTYTN$766,550$981,500$1,186,350$1,474,400
VAN BUREN COUNTYTN$766,550$981,500$1,186,350$1,474,400
WARREN COUNTYTN$766,550$981,500$1,186,350$1,474,400
WASHINGTON COUNTYTN$766,550$981,500$1,186,350$1,474,400
WAYNE COUNTYTN$766,550$981,500$1,186,350$1,474,400
WEAKLEY COUNTYTN$766,550$981,500$1,186,350$1,474,400
WHITE COUNTYTN$766,550$981,500$1,186,350$1,474,400
WILLIAMSON COUNTYTN$943,000$1,207,200$1,459,250$1,813,500
WILSON COUNTYTN$943,000$1,207,200$1,459,250$1,813,500

Memphis Mortgage Programs

Memphis
FHA Loan

Get a loan with a 580 Credit Score and 3.5% down payment

Memphis
VA Loan

No down payment loan for veterans and active-duty.

Memphis
USDA Loan

Get a loan with no down payment required

Memphis
First Time Buyer

Programs for Memphis first time home buyers.

FAQ's

Memphis Conventional Loan FAQs

How Can I Prepare for a Conventional Loan?

No, a 20% down payment is not a strict requirement for a conventional loan. While a 20% down payment can help borrowers avoid private mortgage insurance (PMI), it’s possible to obtain a conventional loan with a lower down payment. Some lenders offer conventional loans with down payments as low as 3% to 5%.

Are all conventional loans 20% down?

Approval for a conventional loan can vary based on factors like credit score, income, and debt-to-income ratio. While it may have stricter requirements compared to some loans, many borrowers with good credit and financial stability are approved.

What is the lowest down payment for a conventional loan?

Conventional loans offer down payment options as low as 3% to 5% of the home’s purchase price. The exact minimum may vary among lenders and loan programs.

Why would I be denied a conventional loan?

Common reasons for denial include a low credit score, insufficient income, high debt-to-income ratio, and inadequate employment history. Lenders assess various factors to determine eligibility.

Is conventional better than FHA?

The choice between conventional and FHA loans depends on individual circumstances. Conventional loans may offer lower costs with a higher down payment, while FHA loans can be more accessible with a lower down payment. Consider your financial situation and goals when deciding which is better for you.

Areas We Serve

Shelby County

Gibson

Fayette County

Madison County

Haywood County

Decatur Coutny

Mississippi

Lexington County

Tipton County

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