By the HomeAffordLab team · Last updated October 27, 2026
To get a conventional mortgage in 2026, you’ll typically need a credit score of about 620, a down payment of at least 3% to 5%, a debt-to-income ratio of 50% or less, and a loan no larger than the 2026 conforming limit of $832,750 in most counties. With less than 20% down, you’ll also pay private mortgage insurance until you reach enough equity.
Conventional loans are the most common type of mortgage in the U.S. They aren’t insured by a government agency. Most follow rules set by Fannie Mae and Freddie Mac, which is why the requirements are similar from lender to lender. This guide covers each requirement and what a conventional loan costs compared with FHA.
Key takeaways
- Credit score: usually 620 or higher. Better scores get lower rates and cheaper PMI.
- Down payment: 3% for first-time buyers and some low-income programs, 5% otherwise, and more for second homes and investment properties.
- DTI: up to 50% with automated approval, 36% to 45% when underwritten manually.
- Loan limit: $832,750 for a one-unit home in most of the country in 2026, up to $1,249,125 in high-cost areas.
- PMI can be canceled at 80% of the original value and ends automatically at 78%.
In this guide: Requirements at a glance · Credit score · Down payment · Debt-to-income ratio · Loan limits · PMI · Other requirements · Conventional vs. FHA · FAQ
Mortgage Payment Calculator
Your full monthly payment: principal, interest, property tax, homeowners insurance, PMI or FHA mortgage insurance, and HOA dues.
Loan balance and what you pay over time
Each year’s principal and interest, and the balance left at year end.
Year-by-year amortization table
| Year | Principal | Interest | Balance |
|---|
Conventional loan requirements at a glance
| Requirement | Typical 2026 standard |
|---|---|
| Credit score | About 620 minimum at most lenders |
| Down payment | 3% (first-time buyers and some programs), 5% standard, 10% for second homes, 15% or more for investment properties |
| Debt-to-income ratio | Up to 50% with Fannie Mae’s Desktop Underwriter; 36% to 45% if underwritten manually |
| Loan limit | $832,750 for one unit in most counties; up to $1,249,125 in high-cost areas |
| Mortgage insurance | PMI required with less than 20% down; removable |
| Property use | Primary homes, second homes, and investment properties |
| Waiting periods | Generally 4 years after a Chapter 7 bankruptcy and 7 years after a foreclosure, shorter with extenuating circumstances |
| Income and employment | Usually a two-year history of stable, documented income |
Credit score requirements
Most lenders require a score of at least 620 for a conventional loan. Fannie Mae removed its 620 floor for loans approved through its automated underwriting system in November 2025, but many lenders and mortgage insurers still use about 620 as their minimum.
Above the minimum, your score sets your price. Conventional loans charge more for lower scores through loan-level price adjustments, which show up as a higher rate or extra points, and through PMI. That’s why borrowers below about 680 often find an FHA loan cheaper. Our credit score guide shows the rate and PMI for each score range.
Down payment requirements
- 3% down: available on standard conventional loans when at least one borrower is a first-time buyer, and through Fannie Mae’s HomeReady and Freddie Mac’s Home Possible programs for borrowers with incomes at or below 80% of the area median.
- 5% down: the usual minimum for other buyers purchasing a primary home.
- 10% down: the usual minimum for a second home.
- 15% to 25% down: typical for investment properties, depending on the number of units.
Gift funds from family members are allowed for a primary residence with a signed gift letter. See our down payment guide for the monthly payment at each down payment level.
Debt-to-income ratio
Fannie Mae allows a debt-to-income ratio of up to 50% for loans approved through Desktop Underwriter. For manually underwritten loans, the limit is 36%, or up to 45% with strong credit and cash reserves. Lenders can set stricter limits. For a comfortable budget, many planners suggest keeping total debts at 36% of gross income or less. Our DTI guide shows how each limit changes how much you can borrow.
2026 conforming loan limits
A conventional loan that meets Fannie Mae and Freddie Mac standards is called a conforming loan. The FHFA sets the maximum size each year. For 2026, the baseline limit for a one-unit home is $832,750. In high-cost areas, the limit can reach $1,249,125, which is 150% of the baseline. Limits are higher for two- to four-unit properties.
Loans above the limit are called jumbo loans. They’re also conventional loans, but lenders set their own rules, usually with higher credit score, down payment, and reserve requirements.
Private mortgage insurance
With less than 20% down, lenders require PMI. It usually costs about 0.46% to 1.50% of the loan per year, depending mostly on your credit score and down payment. Unlike FHA mortgage insurance, PMI doesn’t last forever:
- You can ask to cancel it when your balance reaches 80% of the home’s original value.
- It ends automatically when your balance is scheduled to reach 78%.
- It must end by the midpoint of the loan term, as long as you’re current on payments.
Read our PMI guide for the cost by credit score and ways to remove it sooner.
Other requirements
- Appraisal: the home must appraise at or above the price, or you’ll need to renegotiate or bring more cash. Some loans qualify for an appraisal waiver.
- Cash reserves: depending on your file, lenders may require savings equal to a few months of payments after closing, more for second homes and investment properties.
- Documentation: expect to provide pay stubs, W-2s or tax returns, bank statements, and an explanation of large deposits.
- Homeowners insurance: required before closing, and flood insurance in designated flood zones.
What a conventional loan costs compared with FHA
At the same rate, the cheaper loan depends mostly on your credit score. The table uses a $350,000 home with 3% or 5% down, a 7.32% rate, 1.0% property tax, and $2,450 a year in insurance. The conventional loan assumes a 0.5% PMI rate, typical for strong credit.
| Conventional, 3% down | Conventional, 5% down | |
|---|---|---|
| Loan amount | $339,500 | $332,500 |
| Principal and interest | $2,332 | $2,284 |
| PMI | $141 | $139 |
| Full monthly payment | $2,969 | $2,918 |
An FHA loan on the same home with 3.5% down costs about $3,011 a month, including the 1.75% upfront premium added to the loan and 0.55% annual mortgage insurance that usually lasts for the life of the loan. For borrowers with strong credit, conventional is usually cheaper. For borrowers with scores below about 680, PMI rises enough that FHA often wins. Compare both with your own numbers in our FHA loan calculator.
Frequently asked questions
Is a conventional loan hard to get?
Not if you have a credit score around 620 or higher, steady income, and a manageable debt-to-income ratio. It’s harder than FHA for borrowers with low scores or high debt.
Can I get a conventional loan with 3% down if I’ve owned a home before?
Possibly. Standard 3%-down conventional loans require at least one first-time buyer, which generally means someone who hasn’t owned a home in the past three years. HomeReady and Home Possible can allow 3% down for repeat buyers who meet income limits.
Can a conventional loan be used for a rental property?
Yes. Conventional loans can finance investment properties, usually with 15% to 25% down, higher rates, and larger reserve requirements.
Do conventional loans have prepayment penalties?
Conforming conventional loans generally don’t. You can pay extra principal or pay off the loan early without a penalty.
The bottom line
Conventional loans offer flexibility, low down payments, and mortgage insurance you can cancel. To qualify, aim for a 620 or higher credit score, at least 3% to 5% down, a DTI under 50%, and a loan under $832,750 in most areas. If your score is lower, compare an FHA loan before you decide. Estimate your full payment in the calculator above.
Estimates only. HomeAffordLab is not a lender and does not provide financial advice. This page may contain ads. See our Advertising Disclosure.
Sources: Fannie Mae Selling Guide (B3-6-02 and Eligibility Matrix) · FHFA: 2026 conforming loan limits · Freddie Mac Home Possible · CFPB: When can I remove PMI? · Freddie Mac Primary Mortgage Market Survey