Who Qualifies for a Conventional Loan?

Who Qualifies for a Conventional Loan?

A borrower may qualify if they meet:

Credit score: Typically 620+
Stable income and employment history (usually 2 years)
Debt‑to‑income ratio: Usually up to 45%, sometimes higher with strong factors
Down payment:
As low as 3% for first‑time buyers

5%–20% for most other buyers

Clean credit history (late payments, collections, and BKs are reviewed more strictly than FHA)
Property must be a primary residence, second home, or investment property (Conventional allows all three)

Benefits of an FHA Loan

Mortgage insurance can be removed once the borrower reaches 20% equity
Lower long‑term cost compared to FHA (no lifetime MIP)
Flexible property types: primary, second home, or investment
Competitive interest rates for strong credit borrowers
Higher loan limits than FHA in many counties
Stronger offers in competitive markets (sellers often prefer conventional)
No upfront mortgage insurance premium
More flexible appraisal options compared to FHA