Conventional loans are the most common mortgages in the U.S. Most follow Fannie Mae and Freddie Mac guidelines. Here's what it typically takes to qualify.
Credit Score
The usual minimum is 620. Pricing and mortgage insurance improve meaningfully at higher scores, so a 740 borrower often pays noticeably less than a 660 borrower for the same loan. See what credit score you need.
Down Payment
- Primary residence: as low as 3% through some first-time buyer and income-based programs, and commonly 5% or more
- Second home: usually at least 10%
- Investment property: usually 15–25%
Below 20% down, you'll pay PMI, which you can remove later.
Debt-to-Income Ratio
Most approvals fall at or under about 45% DTI, with some going up to 50% for strong files. Read how DTI works.
Income Documentation
W-2 employees usually provide 30 days of pay stubs and two years of W-2s. Self-employed borrowers usually provide two years of personal and business tax returns. If your returns understate your income, a bank statement loan may qualify you for more.
Loan Limits
Conforming loans have a maximum size set each year by the FHFA, with higher limits in high-cost counties like Los Angeles. Above the limit, you'll need a jumbo loan.
Reserves
Primary residences often need little or no reserves. Second homes, investment properties, and borrowers with several financed properties need more.
Property Rules
- 1–4 unit homes, condos, and townhomes
- Condos must meet project eligibility rules
- Up to 10 financed properties per borrower
Conventional Loan FAQ
What credit score do I need for a conventional loan?
Usually at least 620. Higher scores get better pricing and cheaper mortgage insurance.
Can I get a conventional loan with 3% down?
Yes, through certain first-time buyer and income-based programs. Many other buyers put down 5% or more.
Do conventional loans require PMI?
Only when you put down less than 20%, and it can be removed as you build equity.
Can self-employed borrowers get conventional loans?
Yes, with two years of tax returns. If write-offs reduce your income too much, a bank statement loan may qualify you for more.
In the financial industry since 2015. Licensed loan officer in Los Angeles, California. NMLS #1493724, with UTM Financial, LLC (NMLS #2591548). More about Ivan
This article is general education, not financial, tax, or legal advice. Loan guidelines vary by lender and change often. Not a commitment to lend.