Who it is for
- Borrowers with 620+ credit and documented income
- Buyers who want mortgage insurance they can cancel
- Anyone with 5–20% down and clean recent credit
- Borrowers financing a second home or investment property
Typical Conventional Loan Requirements requirements
| Minimum credit score | 620 at most lenders; better pricing tiers at 680, 720 and 740+ |
|---|---|
| Down payment | 3% for qualified first-time buyers; 5%+ otherwise; 15–25% for investment property |
| Max DTI | Up to 50% with automated approval and compensating factors; 45% is the common comfort zone |
| Mortgage insurance | Required above 80% LTV; cancels automatically at 78% of original value, requestable at 80% |
| Reserves | Often 2–6 months of payments, more for second homes, investment property and high DTI |
| Waiting periods | Chapter 7: 4 years; foreclosure: 7 years; short sale: 4 years (2 with extenuating circumstances) |
| Income documentation | Full documentation standard; 2 years of history in the same line of work |
| Loan limits | Must stay within the conforming limit for the county; above it becomes jumbo |
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.
How it works
- Pull your three-bureau middle score; 620 is the floor, 740+ unlocks the best pricing.
- Keep total monthly debts, including the new payment, at or under 45–50% of gross income.
- Document two years of income history; job changes are fine, career changes need explanation.
- Plan reserves beyond the down payment: lenders want to see you can cover months of payments after closing.
- If you are over 80% LTV, compare PMI quotes across lenders; the monthly cost varies more than most buyers expect.
Try the Mortgage Payment Calculator
Pros and cons
Advantages
- Mortgage insurance can be cancelled, unlike FHA
- No upfront insurance fee
- Works for second homes and investment properties
- Fewer property-condition restrictions than FHA/VA
Trade-offs
- 620 floor is stricter than FHA
- Waiting periods after credit events are longer
- Pricing adjustments hit low credit and high LTV hard
- Investment properties need 15–25% down
Documents you’ll need
- Photo ID and Social Security number
- 2 years of W-2s and tax returns
- 30 days of pay stubs
- 2 months of bank and investment statements
- Landlord or mortgage history for the last 12–24 months
- HOA documents and insurance for condos
Conventional Loan Requirements FAQ
What credit score is needed for a conventional loan?
Most lenders require 620. Pricing improves in tiers, with meaningful breaks around 680, 720 and 740, so a small score gain can be worth real money.
Can I put 3% down on a conventional loan?
Yes, qualified first-time buyers can use 3%-down conventional programs. Repeat buyers generally need 5% down on a primary residence.
When does PMI go away?
You can request cancellation at 80% of the original value with a good payment history, and it drops automatically at 78%. A new appraisal can also remove it if the home appreciated.
What DTI do I need for a conventional loan?
Automated underwriting can approve up to 50% total DTI with strong compensating factors like reserves and residual income, but most files land cleanest at 45% or below.
How long after foreclosure can I get a conventional loan?
Seven years for a foreclosure, four for a Chapter 7 bankruptcy, with shorter timelines possible for documented extenuating circumstances.
Do I need reserves for a conventional loan?
Often yes: expect 2–6 months of payments in the bank after closing, more for second homes, investment properties and borderline files. Retirement accounts usually count.
What is the difference between conforming and conventional?
Conventional describes the loan type, meaning not government-backed. Conforming means it also fits Fannie Mae and Freddie Mac size and guideline limits. Most conventional loans are conforming; a jumbo loan is conventional but non-conforming.
Can I get a conventional loan with a recent job change?
Yes, if you stayed in the same line of work. Lenders want two years of history in your field, not with the same employer. A career change, like teacher to real estate agent, needs a good explanation and sometimes extra documentation.
Do I need to put 20% down to avoid PMI?
No. Twenty percent down is the point where PMI is not required, but you can buy with 3-5% down and pay PMI temporarily. Many buyers do the math and find that buying sooner with PMI beats waiting years to save 20% while prices rise.
How Conventional Loan Requirements compare
| Conventional Loan Requirements | Conventional Loans | Jumbo Loans | Investment Property Loans | |
|---|---|---|---|---|
| Best for | Borrowers with 620+ credit and documented income | Buyers with good credit and steady income | Luxury and high-cost-market purchases | Buying your first or next rental property |
| Down payment | 3% for qualified first-time buyers; 5%+ otherwise; 15–25% for investment property | 3% (eligible first-time buyers), 5%+ otherwise; 15–25% on investment property | Typically 10–20% | , |
| Credit | 620 at most lenders; better pricing tiers at 680, 720 and 740+ | 620 | Typically 680–720+ | , |
| Income docs | Full documentation standard; 2 years of history in the same line of work | , | , | , |
Typical ranges, your Loan Estimate or term sheet confirms actual terms.
Coming soon: a 2-minute walkthrough from our loan team.
Related programs
Conventional Loans
A conventional loan is a mortgage not insured by the government that follows Fannie Mae or Freddie Mac guidelines.
Jumbo Loans
A jumbo loan is a mortgage larger than the FHFA conforming loan limit for your county, used for higher-priced homes.
Investment Property Loans
An investment property loan finances a 1-4 unit rental you do not live in.