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.