What credit score do I need for the best conventional rate?

Pricing improves at 660, 680, 700, 720, 740, and 760. The 740+ tier typically receives the lowest rate adjustments and the cheapest PMI.

Can I put 3% down on a conventional loan?

Yes, through Fannie Mae's HomeReady or Freddie Mac's Home Possible programs. These require first-time buyer status or income limits based on the property's census tract.

When does PMI come off a conventional loan?

You can request PMI removal at 80% loan-to-value based on original value, and the lender will remove it automatically at 78% LTV. With significant home appreciation, you can request early cancellation with a new appraisal.

Are conventional loans assumable?

No. Unlike FHA and VA loans, conventional loans cannot be assumed by a new buyer when the property is sold.

conventional loan

Conventional Loans

Conventional loans aren't backed by a government agency, follow Fannie Mae and Freddie Mac guidelines, and reward strong credit with the lowest rates and most flexible terms available.

Down payment: 3%–5% depending on qualifying factors
Credit score: 620
Loan amount: $832,750 in most counties (2026 conforming limit); higher in high-cost areas
MI: Private mortgage insurance (PMI) required if down payment is under 20%

Best for

Buyers with 620+ credit scores who want competitive rates
Borrowers planning to put 20% down to avoid mortgage insurance
Repeat homebuyers and those refinancing
Buyers of second homes or single-unit investment properties

Eligibility

Credit score of at least 620 (740+ unlocks the best pricing tiers)
Debt-to-income (DTI) ratio typically under 45%, up to 50% with strong reserves
Two years of stable employment history
Property must appraise at or above the purchase price
Loan amount within the annual conforming limit set by the FHFA

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The upside

Lower interest rates than FHA for borrowers with 720+ credit
PMI drops off automatically at 78% loan-to-value
Available for primary, second home, and investment properties
Loan terms from 10 to 30 years, fixed or adjustable

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Worth considering

Stricter credit and DTI requirements than government loans
PMI is more expensive than FHA's MIP for lower credit scores
Higher down payment needed to secure best rates

Documents you'll need

Two most recent pay stubs
Two years of W-2s and federal tax returns
Two months of bank statements (all pages)
Photo ID and Social Security number
Explanation letters for any large deposits or credit issues

When a conventional loan makes sense

Conventional financing is the default for most U.S. homebuyers because it offers the broadest property eligibility and the best long-term cost when you have decent credit. If your credit is 740+ and you can put 20% down, conventional financing will be hard to beat.

If your credit sits in the 620–680 range, or you’re putting less than 10% down, it’s worth running the numbers against an FHA loan first. At the lower end of the credit range, the upfront and monthly mortgage insurance math can favor FHA. Compare both before you commit.

Common questions

What credit score do I need for the best conventional rate?: Pricing improves at 660, 680, 700, 720, 740, and 760. The 740+ tier typically receives the lowest rate adjustments and the cheapest PMI.
Can I put 3% down on a conventional loan?: Yes, through Fannie Mae's HomeReady or Freddie Mac's Home Possible programs. These require first-time buyer status or income limits based on the property's census tract.
When does PMI come off a conventional loan?: You can request PMI removal at 80% loan-to-value based on original value, and the lender will remove it automatically at 78% LTV. With significant home appreciation, you can request early cancellation with a new appraisal.
Are conventional loans assumable?: No. Unlike FHA and VA loans, conventional loans cannot be assumed by a new buyer when the property is sold.