Requirements

What are conventional loan requirements?

Short answer

Conventional approval is based on credit (typically 620+ minimum), DTI (commonly capped 45-50% with overlays), documented stable income, sourced and seasoned assets for the down payment and reserves, an acceptable property and appraisal, and a loan amount within the conforming limit. Lender overlays often tighten Fannie/Freddie's published rules.

Plain-English explanation

The minimum acceptable file generally clears: credit score 620+ (most lenders; some require higher), DTI within automated underwriting tolerance (often 45-50%), two-year employment history with stable income, three to twelve months of reserves depending on file complexity, down payment from documentable sources (own savings, gift, eligible borrower-paid sources), property meeting collateral standards, and loan amount at or below the FHFA county limit (or jumbo if above). Subject to Fannie Mae / Freddie Mac selling guides and lender overlays.

Practical example

A Florida buyer with a 700 credit score, 38% DTI, two years of stable W-2 income, 5% down, three months of reserves, and a property that appraises at contract price clears the standard conventional file. Drop the credit to 600 or the DTI to 55% and the same file usually fails without compensating factors.