A conventional loan is the standard mortgage most U.S. buyers actually use. It is not federally insured or backed. Instead, lenders sell most of these loans to Fannie Mae or Freddie Mac, which sets the rules everyone follows.
A conventional loan typically needs a 620 credit score, 3% down for first-time buyers (5% otherwise), and a debt-to-income ratio at or below 45%. If your down payment is under 20%, you pay private mortgage insurance (PMI) until you reach 20% equity.
For buyers with stable income and decent credit, conventional is usually the lowest total cost over time, especially when you can avoid or quickly drop PMI.
| Minimum credit score | 620 |
|---|---|
| Minimum down payment | 3% (first-time) / 5% otherwise; 20% to skip PMI |
| Debt-to-income (DTI) | Up to 45% (sometimes 50% with strong factors) |
| Mortgage insurance | PMI required under 20% down; cancels at 78% LTV |
| Loan limits (2026) | $806,500 single-family (most counties, 2026) |
| Property types | Primary, second home, investment |
| Upfront fee | None |
These calculators help you sanity-check what this program looks like for your actual situation:
See principal, interest, taxes, insurance, and PMI together.
Find a price range that fits your real monthly budget.
Check whether your debts fit inside the 45% DTI ceiling.
Estimate the cash you need at the table, beyond the down payment.
620 is the practical minimum at most lenders. Pricing improves at 660, again at 700, and meaningfully again at 740. If you are between two tiers, paying down a credit card to drop your utilization can move you up before you lock.
PMI is priced on a sliding scale based on your loan-to-value and credit score, usually 0.2% to 1.5% of the loan amount per year. Federal law requires lenders to drop it automatically when your LTV reaches 78% of the original purchase price. You can also request cancellation at 80% LTV.
If your score is 680+ and you can put at least 5% down, conventional is almost always cheaper over time because PMI is droppable. Below 660 or with a thin file, FHA often wins on monthly payment because its mortgage insurance is priced flat regardless of credit score.
Yes. Expect 15% to 25% down depending on units, slightly higher rates than a primary home, and stricter reserve requirements (often six months of payments in the bank after closing).
The conforming limit is the largest loan Fannie Mae and Freddie Mac will buy. In 2026 it is $806,500 for a single-family home in most counties, with higher ceilings in designated high-cost areas. Loans above this become jumbo loans with separate rules.
After a Chapter 7 bankruptcy, expect a four-year wait from discharge. Two years if it was a Chapter 13. After a foreclosure, the standard wait is seven years, shorter with documented extenuating circumstances.
Yes. On a primary residence, the entire down payment can be gifted by an immediate family member, with a signed gift letter and a paper trail showing the funds were transferred. Investment properties have stricter rules.
Compare side by side: FHA vs conventional and conventional vs jumbo.
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