What do I need to qualify for a conventional loan?

What are the basic requirements?

• Credit score: generally 620 or higher; better scores get better pricing.
• Down payment: as little as 3% for first-time buyers, 5% for most others, and more for second homes and investment properties.
• Income: steady, documented income (W-2s and pay stubs, or tax returns if you're self-employed).
• Debt-to-income: your monthly debts, including the new payment, need to fit within program limits.
• Loan size: within the conforming limit set each year for your county. Above it, I'll walk you through jumbo options.

Self-employed and your tax returns don't show what you really make? Look at Non-QM loans.

Why choose conventional?

• Mortgage insurance comes off. With less than 20% down you'll pay private mortgage insurance (PMI), but it goes away as you build equity, unlike most FHA loans.
• Strong credit gets rewarded with better pricing.
• More property types: primary homes, second homes, and investment properties.
• Fixed or adjustable rates, and options to buy down your rate. See ARM vs. buydown vs. fixed.

What does it cost?

• Closing costs: commonly 2% to 5% of the loan amount: lender fees, appraisal, title, escrow, and prepaid taxes and insurance.
• PMI: depends on your credit score and down payment; the higher each one is, the lower it gets.
• Points (optional): pay upfront for a lower rate, or take a lender credit toward costs. I'll show you both.
• Our costs: because we're the direct lender here, you're dealing with the people who make the decision, and every fee is on your Loan Estimate.

Conventional vs. FHA: which is better for me?

With a credit score above roughly 680 and at least 5% down, conventional usually costs less over time. With a lower score, FHA can be cheaper. I'll price both for you. See all the options on buying a home.

Example scenario (illustrative)

A couple in Fort Worth with 740 credit scores are buying their first home for $380,000 with 5% down. Their conventional loan includes PMI at first, and we map out when they'll reach 20% equity so they can ask to have it removed, lowering their payment years before an FHA loan would.

Our take

If your credit is solid, conventional is usually the best value in lending. We're the direct lender on these, so you get straight answers from the people making the call, and every cost in writing upfront.