There are several reasons why you may not qualify for a conventional loan, including:
Low credit score. A low credit score can make it difficult to qualify for a conventional loan because it indicates to the lender that you may be a higher risk borrower. Lenders typically require a minimum credit score of 620 to 640 to qualify for a conventional loan.
High debt-to-income ratio. Your debt-to-income (DTI) ratio is a measure of how much of your income is going towards debt repayment. If your DTI ratio is too high, it may indicate that you have too much debt and may struggle to repay your mortgage. Lenders typically require a DTI ratio of 43% or less to qualify for a conventional loan.
Insufficient income. To qualify for a conventional loan, you must have a steady income that is sufficient to cover your mortgage payment, living expenses, and other debts. If your income is not high enough, you may not qualify for a loan.
Lack of employment stability. Lenders typically require that you have been employed in your current job for at least two years, and some lenders may require a longer period of employment stability. If you have recently changed jobs or have a history of frequent job changes, you may not qualify for a conventional loan.
Limited documentation. Conventional loans typically require more documentation than other loan options, such as FHA loans or VA loans. If you cannot provide the required documentation, you may not qualify for a conventional loan.
Recent bankruptcy or foreclosure. If you have a recent bankruptcy or foreclosure, you may not be eligible for a conventional loan for several years. The specific waiting period will depend on the type of bankruptcy or foreclosure you have and the lender's requirements.
It's important to understand that these are just some of the factors that may affect your eligibility for a conventional loan, and each lender has its own specific requirements and guidelines. If you're not sure whether you qualify for a conventional loan, it's a good idea to work with a lender or a financial advisor to evaluate your financial situation and determine the best loan option for you.