Conventional loans
Conventional loan requirements: credit, debt, down payment and limits
"Conventional" simply means a loan without a government guarantee, but most of these loans follow detailed rules set by Fannie Mae and Freddie Mac. Knowing the headline rules tells you whether to ask lenders for a conventional quote.
Reviewed November 2026 · Written for Buy Home Tips from the sources listed below
A conventional loan is a mortgage that is not insured or guaranteed by a federal agency such as FHA, VA or USDA. Most conventional loans are "conforming", meaning they meet the rules and size limits for purchase by Fannie Mae or Freddie Mac. This guide uses Fannie Mae's Selling Guide for the specifics; Freddie Mac's rules are similar but not identical, and lenders can add their own requirements.
Credit score
Fannie Mae's guide, updated in November 2026, sets the minimum score for manually underwritten loans at 620 for fixed-rate loans and 640 for adjustable-rate loans. With one borrower, the representative score is used; with more than one, the average of the borrowers' median scores is used for eligibility.
For loans run through Desktop Underwriter, Fannie Mae's automated system, the guide says no minimum credit score is required; the system assesses risk factors instead. In practice, many lenders set their own minimum score, and scores still affect price through loan-level price adjustments.
Debt-to-income ratio
For manual underwriting, the maximum total debt-to-income ratio is 36 percent of stable monthly income, which can go up to 45 percent if the borrower meets the credit score and reserve requirements in Fannie Mae's Eligibility Matrix. Loans through Desktop Underwriter can go up to 50 percent.
Down payment and mortgage insurance
Conventional loans can be made with as little as 3 percent down through certain programs. The CFPB explains that with less than 20 percent down you will usually pay private mortgage insurance, which protects the lender, is arranged by the lender and is provided by private insurers. Unlike FHA's premium with the minimum down payment, PMI can generally be cancelled as your equity grows.
Down payment money can come from your savings and, within the rules, from gifts. Fannie Mae requires no minimum contribution from your own funds for a one-unit principal residence when gifts are used.
Loan limits
FHFA set the 2026 baseline conforming loan limit for one-unit homes at $832,750, up $26,250 from 2025. In high-cost areas, the limit can reach $1,249,125. Loans above the limit for your area are jumbo loans, which follow each lender's own rules.
Property and occupancy
Conventional loans can finance a primary residence, a second home or an investment property, with stricter rules and higher prices for the last two. Condos must meet project requirements, which your lender checks.
How to compare
Ask at least two lenders for conventional and FHA Loan Estimates on the same day, with the same price and down payment. Compare the monthly payment, including mortgage insurance, the cash to close and how long mortgage insurance is likely to last. The cheaper loan today is not always cheaper over the years you expect to keep it.
Mini calculator: your debt-to-income ratios
Lenders divide monthly debt payments by gross monthly income. See your housing-only ratio and your total ratio with a proposed payment.
Limits differ by loan type and lender. A ratio a lender accepts can still be uncomfortable for your household.
Conventional readiness
- Check your credit reports and scores from all three bureaus.
- Calculate your total debt-to-income ratio with a full housing payment.
- Decide on a down payment and ask what private mortgage insurance would cost.
- Make sure your loan amount fits the conforming limit for your area.
- Document the source of your down payment and any gifts.
- Ask for a conventional and an FHA Loan Estimate on the same day to compare.
Questions buyers ask
What credit score do I need for a conventional loan?
Fannie Mae's Selling Guide sets minimums of 620 for fixed-rate and 640 for adjustable-rate loans that are manually underwritten. For loans run through Desktop Underwriter, the guide says no minimum score is required and the system assesses the borrower's risk factors. Lenders often set their own minimums.
How much do I need to put down on a conventional loan?
Some conventional programs allow as little as 3 percent down. With less than 20 percent down, you will usually pay private mortgage insurance.
What is the conventional loan limit for 2026?
FHFA set the 2026 baseline conforming loan limit for one-unit homes at $832,750, with a ceiling of $1,249,125 in high-cost areas. Larger loans are jumbo loans with different rules.
Can I cancel mortgage insurance on a conventional loan?
Generally yes, once you build enough equity and meet the conditions. That is a key difference from FHA loans with less than 10 percent down.
Sources checked for this page
- Fannie Mae Selling Guide B3-5.1-01: general requirements for credit scores
- Fannie Mae Selling Guide B3-6-02: debt-to-income ratios
- FHFA: 2026 conforming loan limit values
- CFPB: what is private mortgage insurance
- Fannie Mae Selling Guide B3-4.3-04: personal gifts
Checked November 2026. Programs and limits change; confirm with the source before you rely on a figure.