A conventional mortgage typically requires solid credit, steady income, manageable debt, and a down payment that meets program guidelines. Requirements vary by lender and loan type, but most follow Fannie Mae and Freddie Mac standards.

Common conventional loan requirements include:

– Credit score: Many programs require a minimum score around 620, though stronger credit may improve your options.
– Down payment: Some conventional loans allow as little as 3% down for eligible buyers, while 5% or more is common. A 20% down payment can help avoid private mortgage insurance (PMI).
– Debt-to-income ratio: Lenders review how much of your monthly income goes toward debts. Many conventional loans allow debt-to-income ratios up to around 45%, and sometimes higher with strong compensating factors.
– Stable income and employment: You’ll generally need to document consistent income with pay stubs, W-2s, tax returns, or other proof depending on how you’re paid.
– Assets and reserves: Lenders may ask for bank statements to verify your down payment, closing costs, and sometimes extra reserves.
– Property requirements: The home must meet basic condition and appraisal standards, and the appraised value needs to support the purchase price or loan amount.
– Loan limits: Conventional loans must stay within conforming loan limits unless you’re using a jumbo loan, which has different requirements.

Conventional loans can be used for primary residences, second homes, and investment properties, but requirements are usually stricter for non-primary homes. The best way to know where you stand is to get preapproved so a lender can review your credit, income, assets, and the specific property type.

A conventional mortgage is a home loan that isn’t backed by a government agency (like FHA, VA, or USDA). Instead, it follows guidelines set by Fannie Mae and Freddie Mac. Here are the typical requirements:

**Credit Score**
– Minimum 620 credit score for most conventional loans
– Higher scores (740+) generally unlock better pricing and terms

**Down Payment**
– As little as 3% down for first-time homebuyers (Conventional 97 program)
– 5% down is more common for repeat buyers
– 20% down avoids private mortgage insurance (PMI)

**Debt-to-Income (DTI) Ratio**
– Generally capped around 45%, though some borrowers may qualify up to 50% with strong compensating factors (high credit, reserves, etc.)

**Income & Employment**
– Two years of consistent employment history, ideally in the same field
– W-2s, pay stubs, and tax returns for documentation
– Self-employed borrowers typically need two years of tax returns

**Assets & Reserves**
– Documented funds for down payment and closing costs
– Some loan scenarios (investment properties, jumbo loans) require cash reserves equal to several months of mortgage payments

**Property Requirements**
– Home must appraise at or above the purchase price
– Property must meet basic safety and structural standards
– Eligible property types include primary residences, second homes, and investment properties

**Loan Limits**
– For 2024, the conforming loan limit is $766,550 in most U.S. counties (higher in designated high-cost areas)
– Loans above this amount become “jumbo” loans with stricter requirements

**Private Mortgage Insurance (PMI)**
– Required when putting down less than 20%
– Can typically be removed once you reach 20% equity

Conventional loans tend to be a great fit for borrowers with solid credit and stable income, since they offer flexible terms, competitive pricing, and the ability to drop mortgage insurance over time—something government loans like FHA don’t always allow.

Conventional loans, which are not insured by the government, generally require a minimum credit score of 620, a stable and verifiable income, and a down payment of at least 3-5%. Lenders evaluate your overall financial profile to determine your eligibility for this type of mortgage.

Here are the typical requirements broken down in more detail:

* **Credit Score:** The minimum credit score for a conventional loan is typically 620. However, a higher score (often 740 or above) may help you qualify for more favorable loan terms and pricing. Lenders will also review your full credit history for late payments, collections, or other negative marks.

* **Down Payment:** For first-time homebuyers, the minimum down payment can be as low as 3%. For other borrowers, it is generally 5%. If you put down less than 20%, you will almost always be required to pay for Private Mortgage Insurance (PMI), which protects the lender if you default on the loan.

* **Debt-to-Income (DTI) Ratio:** Your DTI ratio is the percentage of your gross monthly income that goes toward paying your monthly debts, including your new proposed mortgage payment. While the maximum DTI can vary, lenders generally prefer a ratio of 43% or lower. Some automated underwriting systems may allow for a DTI up to 50% for borrowers with strong compensating factors, such as a high credit score or significant cash reserves.

* **Income and Employment:** Lenders need to see that you have a stable and reliable income to afford the mortgage payments. They will typically want to see a two-year history of employment, verified through pay stubs, W-2s, and tax returns. If you are self-employed, you will likely need to provide at least two years of business and personal tax returns.

* **Cash Reserves:** After paying your down payment and closing costs, lenders want to see that you have sufficient funds remaining in your bank account. These are called cash reserves. The amount required varies, but having enough to cover two to six months of your total mortgage payment is a common benchmark.