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Conventional Loan Credit Score Requirements
When applying for a conventional loan—a home loan not backed by the government—your credit score is a key factor in approval and your interest rate.
- Minimum Score: Typically 620 is the baseline required by Fannie Mae and Freddie Mac for conforming loans
- Better Rates: Scores in the 660–680 range qualify as “good,” while 700+ can unlock top-tier interest rates
- ARM Loans: Adjustable-rate mortgages may require slightly higher scores or average scores for multiple borrowers
Some lenders go above and beyond, requiring scores of 680+ for best terms, but applicants with scores in the high 600s can still secure a loan, though possibly at a higher rate or with added fees .
Why Credit Score Matters
A higher credit score not only eases loan approval but also:
- Reduces interest rates and loan level price adjustments (LLPAs)
- Helps avoid private mortgage insurance (PMI) quickly
- Improves likelihood of approval at 43–50% debt-to-income (DTI) ratios
Other Conventional Loan Requirements
Credit score isn’t the only qualification hurdle—here’s what else lenders check:
- Down Payment
3–5% for most borrowers, especially first-time buyers.
20%+ to avoid PMI entirely. - Debt-to-Income Ratio (DTI)
Standard max: 43–45%; lenders may allow up to 50% with strong credit or additional assets. - Reserves & Income Stability
Lenders prefer 2–6 months of reserves; stable income is essential, even for self-employed borrowers. - Property Type & Loan Size
Conforming conventional loans must fall within FHFA limits ($766,550 standard, up to ~$1.2M in high-cost areas).
Jumbo loans exceed those limits and demand higher scores (700+), lower DTI, larger down payments.
How to Improve Your Credit Score Before Applying
If your score is below ideal, here are proven steps:
- Check Reports & Dispute Errors
Obtain free reports from Experian, Equifax & TransUnion; correct any inaccuracies. - Pay On Time & Lower Balances
Late payments heavily hurt scores. Automate payments. Keep utilization below 30%. - Strategically Raise Limits
Light balance but higher limits = better utilization rate. - Remove One-Time Late Payments
Some creditors may remove occasional late entries upon request. - Give It Time
Credit habits improve scores gradually; major derogatory items stay on record for 7 years.
FAQ
Can I still get a conventional loan with a credit score under 620?
Some lenders offer exceptions for scores in the 580–619 range, but expect higher interest rates, mandatory higher down payments, and stricter DTI criteria. FHA loans may be better alternatives in such cases.
What if I have a low score and high DTI?
You may still qualify by increasing your down payment, reducing other debts, or boosting cash reserves.
How soon can I qualify after bankruptcy or foreclosure?
Conventional loans usually require a 4-year wait after bankruptcy and 7 years after foreclosure, plus re-establishing good credit .
Read Next
Summary
- Minimum credit score for a conventional loan: 620 (but 660+ preferred for lower rates).
- Ideal score range: 700–740+—lowers interest, PMI, and helps qualify under tight DTI.
- Other key requirements: 3–20% down payment, DTI ≤ 45%, 2–6 months reserves, conforming loan amounts.
- Before applying: Optimize your credit report, make consistent payments, reduce debt, and track your score.
Take the first step: check your credit score, talk to a loan officer, compare rates—and get onto the path toward conventional loan approval.
Get Expert Financing
- Matched with investor-friendly lenders
- Fast pre-approvals-no W2s required
- Financing options fro rentals, BRRRR, STRs
- Scale your portfolio with confidence
Our advice is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.
