Key takeawayConventional opens: 3% HomeReady/Home Possible, 5% standard, compare directly against FHA.
What concretely changes at 620
- Conventional opens: 3% HomeReady/Home Possible, 5% standard, compare directly against FHA.
- PMI at 620 is expensive, so low-down conventional often loses to FHA on monthly cost, run both Loan Estimates.
- DPA pairing begins: some programs accept 620; the 640 flagships are 20 points away.
- You are shopping the whole market, lender competition works in your favor for the first time.
Requirements at this band
| Conventional | Available: 3% HomeReady, 5% standard |
|---|---|
| FHA | 3.5% down, lifetime MIP |
| PMI at 620 | Expensive, compare vs. FHA MIP |
| DPA | Some at 620; majors at 640 |
Figures are typical market ranges as of October 2026. Actual terms depend on the lender, your credit, the property and the program, and are confirmed on your Loan Estimate or term sheet.
Smart moves at 620
- Never accept a single-option presentation at 620, demand FHA vs. conventional side by side.
- With 5%+ down, conventional often wins despite pricey PMI.
- If DPA is the plan, 640 is the target; ask what 20 points costs in time.
FAQ
3% down conventional or 3.5% FHA at 620?
It depends on PMI quotes vs. FHA MIP. At 620, FHA usually wins under 5% down; conventional takes over as down payment grows.
What is HomeReady?
Fannie Mae’s 3%-down program for low-to-moderate income buyers with reduced MI, often the best conventional path at 620.
Can I drop PMI later?
Yes, conventional PMI drops at 80% LTV (or via refinance). FHA MIP usually does not. This is conventional’s long-term edge.