What Credit Score Do You Need for a Conventional Loan?
Your credit score is one of the most important factors in conventional loan approval — but the rules are not as rigid as most people think. Here is exactly how credit score affects your eligibility, your rate, and your options.
The minimum credit score
For loans run through Fannie Mae’s Desktop Underwriter, there is technically no hard minimum credit score. DU evaluates the entire loan profile and can approve borrowers with lower scores when other factors are strong. In practice, most lenders require a minimum of around 620. Freddie Mac’s Loan Product Advisor sets a firm 620 minimum. For manually underwritten loans, Fannie Mae requires a minimum of 620 for fixed-rate loans and 640 for adjustable-rate mortgages.
For affordable programs like HomeReady, the minimum credit score is generally 620.
Which credit score is used?
For a single borrower, lenders use the middle of three scores from Equifax, Experian, and TransUnion. For multiple borrowers, Fannie Mae uses the average of each borrower’s middle score to determine eligibility.
How credit score affects your rate
Conventional loans use a pricing matrix called loan-level price adjustments (LLPAs). As your score decreases, the pricing adjustment increases — meaning a higher rate or more points at closing. The difference between a 760 and a 680 score on the same loan can be 0.5%–1.0% in rate.
| Credit Score Range | Eligibility | Pricing Impact |
|---|---|---|
| 760+ | Full access, all programs | Typically the strongest pricing; varies by loan scenario |
| 720–759 | Full access | Near-best pricing |
| 680–719 | Full access | Moderate adjustments |
| 640–679 | Most programs | Higher adjustments |
| 620–639 | Limited programs | Significant adjustments |
| Below 620 | Generally not eligible | — |
Credit score and PMI cost
Your score also affects your PMI rate when putting less than 20% down. A borrower with a 760 score pays significantly less PMI than one with a 680 score at the same LTV — making the total monthly cost impact larger than just the rate difference alone.
A preparation timeline
Three to six months before applying
- Pull your reports from all three bureaus and dispute errors in writing. Corrections can take weeks.
- Pay down revolving balances. Lowering card utilization is often the fastest lever.
- Keep every account current. A single late payment can cost more than any other change you make.
One to three months before
- Stop applying for new cards and financing, including store cards at checkout.
- Leave old accounts open unless there is a reason to close them, since closing lowers your available credit.
- Talk to us. We can tell you which changes are worth making and when a lender-requested rescore might help.
After you apply
- Do not finance a car, furniture, or appliances until you have closed.
- Do not move balances around to chase a score. It can change reported utilization.
- Respond to underwriting requests quickly, since delays can bump into a lock expiration.
A worked example of the middle score (illustrative example, not a quote)
A borrower pulls scores of 701 from one bureau, 688 from another, and 695 from the third. The lender uses the middle number, 695, not the highest and not the average. When two borrowers apply together, we explain how your scenario is scored, since eligibility and pricing can treat joint files differently.
What not to do right before closing
Underwriters often re-check credit shortly before closing. A new account, a large new balance, or a missed payment between approval and signing can change the score or the debt-to-income ratio. Treat your accounts as frozen until the loan funds.
Frequently asked questions
Will several lender inquiries hurt my score?
Credit scoring models generally treat multiple mortgage inquiries in a short window as one search, so comparing options is usually fine. We can explain the timing for your situation.
Why is my app score higher than the lender’s?
Free score apps often show a different scoring model than the one used for mortgages. The numbers can differ by a notable margin, so do not rely on the app alone.
How long does a late payment or collection affect my approval?
It depends on the type of event, how recent it is, and the overall profile. Reach out with the details and we can tell you what we would look at.
Related guides
- Checking your credit score
- How credit affects PMI
- FHA credit score requirements
- Who qualifies for a conventional loan
Key takeaways
- Minimum credit score: 620 for most lenders; 640 for adjustable-rate loans (manual underwriting).
- Fannie Mae DU has no hard floor — it evaluates the full borrower profile.
- Middle score of three bureaus is used; for multiple borrowers, the average median score applies.
- Scores below 620 are generally ineligible for conventional financing.
- Higher scores unlock better pricing through loan-level price adjustments (LLPAs).
- Credit score also affects PMI cost — improving your score before applying can save significantly.
- Which of three scores counts is the middle one, so one low bureau may not sink you.
- Do not open new credit or move balances between cards while your loan is in process.
- Mortgage lenders use specific scoring models that can differ from the free scores in apps.
Ready to explore your conventional loan options? Lendia can walk you through what you qualify for and find the right program for your goals.