Conventional Loan Requirements and Limits

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Conventional Loan Requirements and Limits

…and how they compare to FHA Loans As the name implies, Conventional…

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…and how they compare to FHA Loans

As the name implies, Conventional Loans are the most common mortgages for homeowners in the US. Think of them as the Levi’s 501 Jeans of home loans. They’re going to fit most people’s needs, but just because you can get into them, doesn’t necessarily make them the best choice for every occasion. Trust us you don’t wanna wear those jeans to the beach. You’ll never get the sand completely out…especially in that stupid “coin pocket” where coins only go to die.

Ok but I digress…back to conventional loans:

Conventional loan requirements are a bit stricter than the government backed alternatives (like FHA, VA, and USDA loans) but borrowers save in the long run because there’s no upfront mortgage insurance plus the monthly insurance (MI) payments are cheaper…and MI is altogether eliminated when putting a 20% down payment. Let’s break it all down and also compare FHA loans vs Conventional Loans because these are the two most popular mortgage options.

2021 Conventional Loan Requirements:

  • 620 FICO score requirement
  • At least a 3% of the purchase price is requires for a conventional loan down payment* but this depends on the borrower’s credit score and debt to income ratio.
  • Mortgage insurance (PMI) is required whenever the down payment is below 20%
  • Loan amount must be within the conforming conventional loan limits. In Los Angeles and Orange County the limit is $822,375 but in most U.S. counties, the limit is $548,250, but check with a mortgage professional to confirm as they change every year and can vary county by county.
  • Steady employment with proven income, W2’s and paycheck stubs
  • Tax returns are needed if there’s self employed income or other real estate
  • Borrowers must be at least 18 years of age

*to qualify for purchase loans with less than 5% down payment, home-ownership education will be required for at least one borrower, when all occupying borrowers are first-time home-buyers.

Conventional Loan Advantages:

  • No upfront mortgage insurance
  • Lower monthly mortgage insurance compared with FHA – especially for borrowers with higher credit score and/or larger down payment
  • No monthly mortgage insurance if downpayment at least 20% down
  • Do not need occupy the home as primary residence – but conventional loan rates are higher when the owner doesn’t occupy


  • Higher interest rates when compared with FHA loans
  • Stricter minimum credit score and down payment requirements compared with FHA loans

Hope this info helps and don’t forget, we’re here to help if you have any more questions.

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