Conventional Loan Requirements
Credit Score Requirements
- Minimum Credit Score: 620 (Higher scores qualify for better rates)
- Good Credit History: Lenders prefer borrowers with a stable credit history and low credit utilization.
Down Payment
- 3% Down Payment: Available for first-time homebuyers or those with limited funds.
- 5% – 20% Down Payment: Standard for most borrowers.
- 20% or More: Eliminates the need for PMI.
Debt-to-Income (DTI) Ratio
- Maximum DTI: 43%-50% (Lenders prefer a lower ratio, but exceptions can be made).
- Your monthly debts, including mortgage payments, should not exceed this percentage of your income.
Employment & Income Stability
- Steady Employment: A minimum of two years of employment history is typically required.
- Proof of Income: Pay stubs, tax returns, and W-2s are needed for verification.
Loan Limits
- The 2024 conventional loan limit for a single-family home is $766,550 in most areas but can be higher in expensive housing markets.
Private Mortgage Insurance (PMI)
- Required if the down payment is less than 20%.
- Can be canceled once equity reaches 20% or more, unlike FHA mortgage insurance, which lasts the life of the loan.