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Credit Score Requirements for Conventional Loans

By Steven Roberts Updated on 6/8/2017

What credit score do you need to qualify for a conventional loan? Review the list below to find out what type of conventional loan you may qualify for:

  • 580:    Minimum credit score to qualify for a conforming loan.
  • 600:    Accepted by a few lenders, but requires a larger down payment.
  • 620:    Considered the minimum credit score for 95% financing and to qualify for the lowest down payment.
  • 640:    The average minimum credit score required by mortgage lenders for conventional loans.
  • 680:    Threshold for borrowers to qualify for reduced interest rates.
  • 740:    Minimum score for borrowers to qualify for best interest rates.


Credit Scores

Score of 580 or Below

While not common, there are some prospective homebuyers that qualify for conventional loans with credit scores as low as 580 or even lower for non-conforming conventional loans. However, borrowers with low credit scores who also cannot afford to make a large down payment should look into conventional loan alternatives.

Score of 620-640+

With a credit score of 620, borrowers will qualify for 95 percent financing, reducing the minimum down payment dramatically and making conventional loans a viable option. However, the majority of lenders require a credit score of 640 for borrowers to qualify for conventional loans.

Score of 680 and above

Upwards of 680, borrowers will not be able to further reduce down payment requirements; however, borrowers may qualify for a better interest rate.

Obtaining a Conventional Loan After Bankruptcy:

  • Chapter 7/11– Following a Chapter 7 or Chapter 11 Bankruptcy, borrowers must wait a minimum of 4 years before acquiring a new conventional loan. Under special circumstances, this waiting period may be reduced to two years. However, the new conventional loan may be underwritten after only a year, provided that the borrower presents a letter of explanation and credit history has been adequately re-established.
  • Chapter 13– Following a Chapter 13 Bankruptcy, borrowers must wait a minimum of two years from the discharge date or four years from the date of dismissal. If extenuating circumstances are presented, borrowers may reduce the waiting period from the dismissal date to two years.

Multiple bankruptcy filings – After filing for bankruptcy two or more times within a seven year period, borrowers must wait five years before regaining eligibility. With extenuating circumstances, the waiting period is reduced to three years from the latest discharge or dismissal date.

Obtaining a Conventional Loan After Foreclosure

Borrowers who have undergone a foreclosure must wait seven years before applying for a new conventional loan. However, if extenuating circumstances are presented, this may be reduced to three years. Freddie Mac provides additional help and information to borrowers struggling with obtaining a mortgage after foreclosure here

Obtaining a Conventional Loan After a Short Sale

Following a short sale, borrowers must wait four years to borrow up to 80 percent LTV, four years for 90 percent LTV, and seven years for total eligibility. In extenuating circumstances, borrowers may reduce their waiting period to three years and borrow up to 90 percent LTV for the loan.

Where to get a Conventional Loan

Choosing the right loan program and lender can take some time. Smart home buyers set aside enough time to compare lenders and rates in order to be sure that a loan program is the best choice for their unique circumstances. Even small differences between interest rates could save or cost hundreds if not thousands of dollars over the life of the loan. Patience and persistence are important assets when looking for a loan.

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About The Author:
Steven Roberts
Steven Roberts is an editor for Lender411. He specializes in mortgage and finance. Steven graduated from Cal State Long Beach. Contact him at Steven@Lender411com.

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