Who Qualifies for a Conventional Loan?
Conventional loans are available to a wide range of borrowers — but the qualification criteria are stricter than government-backed loans. Here is a clear breakdown of who qualifies and what lenders are looking for.
Credit score
Most lenders require a minimum credit score of 620. Freddie Mac sets a firm 620 minimum; Fannie Mae’s automated system typically approves to 620 in practice. Scores below 620 are generally not eligible. The best rates are reserved for borrowers with scores of 740 or higher.
Income and employment
Conventional loans require stable, documented income and a two-year employment history in the same field. W-2 employees provide pay stubs and tax returns. Self-employed borrowers (25% or more ownership in a business) typically need two years of personal and business tax returns plus a cash flow analysis. Income must be stable and likely to continue.
Debt-to-income ratio
Total monthly debts including the proposed housing payment generally cannot exceed 50% of gross monthly income through automated underwriting. For manually underwritten loans the cap is 36–45%.
Down payment and assets
Down payments start at 3% for first-time buyers on a primary residence. You will also need sufficient assets for down payment, closing costs, and any reserve requirements. Eligible assets include checking, savings, 401(k), and investment accounts.
Citizenship and residency status
U.S. citizens and permanent resident aliens qualify under standard guidelines. Non-permanent resident aliens — including those with valid H-1B, H-2, L, or O visas — may also be eligible, provided they have a valid Social Security number and can document legal residency. DACA recipients may be eligible depending on specific lender guidelines.
Maximum financed properties
Borrowers can have up to 10 conventionally financed properties simultaneously. Having 7–10 financed properties triggers a 720 minimum credit score and higher reserve requirements.
A quick self-check
| Factor | What we look at | What to gather |
|---|---|---|
| Credit | Middle score, recent late payments, collections | Authorization to pull your report |
| Income | Two-year history, stability, type of pay | Pay stubs, W-2s, tax returns |
| Debts | Monthly payments against gross income | Statements for loans and cards |
| Assets | Down payment, closing costs, reserves | Two months of statements |
| Property | Use (primary, second, rental) and loan size | Purchase contract or address |
Three borrower snapshots (illustrative examples, not quotes)
- Snapshot A. A 690 middle score, two years at the same employer, and a ratio in the low 40s. This is a typical conventional profile, and the main question is the size of the down payment.
- Snapshot B. A 610 score with steady income. This falls below the usual conventional floor, so the practical options are to raise the score or compare an FHA loan.
- Snapshot C. A 735 score and 14 months of self-employment after a career in the same field. This may be workable under the exceptions, so a conversation about documents comes first.
Common mistakes before applying
- Changing jobs, or moving from salary to commission, between the application and closing.
- Leaving a debt off the application because it is small or in a family member’s name.
- Co-mingling savings with a relative’s money, which leaves unclear ownership of funds.
- Waiting for the perfect score when a smaller improvement would already change your pricing.
Documents to have ready
- Two years of W-2s and tax returns, plus recent pay stubs
- Two months of statements for every account holding down payment funds
- Statements for each loan and credit card, and a copy of any divorce decree or support order
- Proof of residency status, if you are not a U.S. citizen
Frequently asked questions
Do I need two years with the same employer?
No. The standard is a two-year history, generally in the same field, so a job change within your line of work is usually fine.
Can I qualify with an ITIN or without a Social Security number?
Conventional loans generally require a Social Security number. ITIN borrowers may look at ITIN mortgage options.
How far in advance should I talk to a loan officer?
Ideally a few months before you start touring homes, so there is time to fix issues rather than just find them.
Related guides
- Credit scores for conventional loans
- Debt-to-income limits
- Self-employed borrowers
- Getting preapproved
Key takeaways
- Minimum credit score: 620 for most programs; 640 for manual underwriting of ARMs.
- Two-year employment history in the same field is the standard requirement.
- DTI limit: 50% via automated underwriting; 36–45% for manual underwriting.
- U.S. citizens, permanent residents, and non-permanent residents with valid visas may qualify.
- Up to 10 conventionally financed properties allowed; 7+ triggers a 720 minimum score.
- First-time homebuyer status resets after three years of not owning a principal residence.
- A 690 score with two years of steady income and a manageable ratio is a typical conventional profile.
- Job changes during the process can change the documents you need.
- Gather statements and tax documents before you apply to avoid delays.
Ready to explore your conventional loan options? Lendia can walk you through what you qualify for and find the right program for your goals.