How to Qualify for a Conventional Loan

Getting approved for a conventional mortgage comes down to proving you’re a reliable borrower.

A combination of strong credit, a manageable debt-to-income ratio, sufficient funds for your down payment and closing costs, and stable, well-documented income are all key to qualifying.

Whether you qualify for a conventional mortgage ultimately comes down to your unique financial situation, but we’ve compiled some common factors lenders look at when evaluating your application.

Conventional Mortgage Basics

A conventional mortgage is a home loan not backed by the federal government, typically conforming to Fannie Mae and Freddie Mac rules and loan limits.

That’s different from FHA, VA, and USDA loans, which are government-backed and often have more flexible credit or down payment options, but also come with different costs and eligibility rules.

Conventional loans generally have stricter standards and require private mortgage insurance if your down payment is under 20%, though PMI can be removed later.

What Credit Score Do You Need for a Conventional Loan?

A credit score heavily influences your eligibility and the rate you’ll receive. A credit score is a three-digit number ranging from 300 to 850 that measures your reliability as a borrower. Lenders use it to set loan approval and rates.

Most lenders look for at least a 620 credit score for conventional loans, although higher scores can unlock better rates and lower PMI costs.

Here are some general ways credit scores can impact your loan. This table is illustrative only, and other factors like your down payment also play a major role in whether you qualify.

Conventional Loan DTI Requirements

Debt-to-income (DTI) ratio is the percentage of your gross monthly income that goes toward debt payments, including your proposed mortgage.

Many lenders prefer a DTI of 43% or lower, though some approve up to 50% for borrowers with compensating factors like a high credit score or down payment.

Here’s how to estimate your DTI

1. Add up all monthly debt payments, including credit cards, auto, student loans, personal loans, child support, and the projected mortgage payment.
2. Divide by your gross monthly income. That’s your income before taxes, calculated by dividing your annual pre-tax income by 12.
3. Multiply by 100 to get your DTI percentage.

Keep in mind that if you have a co-borrower, both their income and debts count toward DTI

You can use our calculator to get an idea of your DTI. Keep in mind our calculator is only an estimate, and you’ll need to consult with a professional to get your actual DTI.

Conventional Loan Down Payment Requirements

First-time buyers may qualify with as little as 3% down on a conventional loan, while most repeat buyers need 5% or more.

If you put less than 20% down, lenders require private mortgage insurance, which increases your monthly cost. You can request to cancel your PMI when you reach 80% loan-to-value, and it falls off automatically at 78% LTV.

Conventional Loan Closing Costs

Plan for closing costs, too. Typical conventional home loan closing costs can include:

• Lender fees, including origination and underwriting.
• Appraisal and credit report
• Title search and insurance
• Recording and document fees
• Prepaid items like interest, taxes, insurance.

Aim to save for the down payment, 2% to 5% of the purchase price for closing costs.

Documents Needed to Apply for a Conventional Loan

Lenders verify your capacity to repay with documented, stable income and assets.

Most borrowers should expect to provide recent pay stubs, two years of W-2s, and recent bank statements to confirm funds and reserves. Those are all core elements of Freddie Mac’s Four Cs of qualifying.

Self-employed borrowers typically submit two years of personal and business tax returns to show consistent earnings.

Here’s what you should have ready when you apply for a conventional home loan:

• 30 days of pay stubs
• Two years of W-2s (or full tax returns if self-employed)
• Most recent 2 months of bank/asset statements
• Government-issued ID
• Documentation for additional income (pension, alimony, child support), if used to qualify

Conventional Mortgage Pre-Approval

Getting pre-approved is one of the best ways to confirm you qualify for a conventional mortgage before you start shopping for a home.

A pre-approval is a lender’s written estimate of how much you may be able to borrow, based on a review of your credit, income, assets, and debts. It helps you understand your price range and shows sellers you’re a serious, qualified buyer.

Steps to get pre-approved

Most borrowers can expect the process to include:

• Completing a short mortgage application
• Providing basic financial documents like pay stubs and bank statements
• Letting the lender check your credit and verify your information
• Receiving a pre-approval letter.

Keep in mind that pre-approval is not a final loan commitment. Your mortgage terms and approval can still change based on the home you choose and a full review of your application before closing.

The Bottom Line

You’ll typically need a credit score of at least 620 and a DTI of 43% or lower to qualify for a conventional loan. You’ll also need to make a down payment of at least 5%, although some qualifying first-time homebuyers can make a down payment as low as 3%.

Frequently Asked Questions

What credit score do I need for a conventional mortgage?

Most lenders require a minimum credit score of 620, but scores of 740 or higher can qualify you for better rates and lower PMI.

What is the minimum down payment required?

First-time buyers can put down as little as 3%, while most repeat buyers need at least 5%.

How does debt-to-income ratio affect qualification?

Lenders typically prefer DTI at or below 43%, though some may allow up to about 50% with strong compensating factors.

What income documents will lenders require?

Plan to provide recent pay stubs, two years of W-2s or tax returns if self-employed, and recent bank statements to verify assets.

When is mortgage insurance necessary and how can it be removed?

PMI is required with less than 20% down and can often be removed once you reach about 20% equity, subject to lender rules and an updated valuation.