Conventional Loan Requirements for First-Time Home Buyers in 2025
Lisa Chen
Published Jun 27, 2025
If you're thinking about buying a home, a conventional loan might be a good option for you. Contrary to popular belief, getting approved for this type of loan might be easier than you think! You generally need:
- A credit score of at least 620
- A steady job and income for the past two years
- A down payment of at least 3%
The good news is that you don't always need a perfect credit score or a 20% down payment to qualify anymore.
Read more: Easy Guide to Down Payment Help in the USA
Basic Requirements for a Conventional Loan
To qualify for a conventional loan, which is a loan not backed by the government, you'll need to meet certain criteria. Here are some of the basics:
- Credit Score: A minimum score of 620 is typically required.
- Down Payment: Expect to put down at least 3-5% of the home's price, although some programs may let you put down less.
- Debt-to-Income Ratio (DTI): Your total debt payments each month, including your future mortgage, shouldn’t exceed 43% of your gross monthly income.
- Employment: Lenders like to see at least two continuous years of employment.
- Loan Limits: The loan amount must be within set limits, which vary by location.
Additional Points
- Private Mortgage Insurance (PMI): If your down payment is less than 20%, you'll likely need to pay PMI, which protects the lender if you can't pay your mortgage. However, you can request to cancel it once you've paid down enough of your loan.
- Property Types: Eligible properties include single-family homes and multi-unit properties up to four units. The property should be in good condition and primarily for residential use.
Check out: Easy Guide to Home Buying for People with Disabilities in 2024
Loan Process
Applying for a conventional loan involves checking your credit score, verifying your income and employment, and ensuring the property you want to buy meets lender requirements. The entire process typically takes between 30-45 days.
Conclusion
Conventional loans can be a fantastic option with flexible requirements, allowing more people to become homeowners without the pressure of a huge down payment or perfect credit.
Always compare different lenders to find the best terms for your situation. If one lender doesn't approve your application, another might, so it’s worth shopping around.
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