What Is The Minimum FICO Score For A Conventional Loan?

A conventional loan can be approved with a 620 FICO score when you meet the baseline set by Fannie Mae and Freddie Mac: 620 or higher, steady employment (usually two years), a debt‑to‑income ratio under about 45 %, and a minimum down payment of 3 % for a primary residence. Lenders often add overlays that push the required score higher, so confirm each lender's exact threshold before you apply.

To plan for the 620 minimum, clean up any recent credit blemishes, pay down revolving balances to lower your DTI, and save for at least the 3 % down payment. If you can increase the down payment or further reduce DTI, those factors can offset a score that hovers just at 620 - details on using a larger down payment appear in the next section.

Lenders often require a FICO score above the 620 baseline because they apply overlays to protect profit and limit risk; the next section shows which of your three scores lenders actually examine.

• Fannie Mae/Freddie Mac set 620 as the minimum, but many banks add overlays of 640‑660 to qualify for their best rates.
• Higher scores signal lower default probability, letting lenders price loans more competitively.
• Borrowers at 620 sit in higher interest‑rate bands; a higher cutoff lets lenders stay in cheaper tiers.
• Jumbo or large‑loan programs usually demand 660+ because the exposure is greater.
• Investment, second‑home, and high‑LTV loans often carry stricter score floors.
• Automated underwriting systems flag sub‑620 scores for manual review, and many lenders avoid that extra work.

• Lenders evaluate one FICO score, usually the version they specify (most often FICO 8 for conventional mortgages).
• The score comes from a single credit bureau report - not a 30‑day, 90‑day, or 12‑month average.
• Fannie Mae minimum credit score guideline sets 620 as the baseline; meeting that single score generally satisfies the conventional loan requirement.
• Many lenders apply overlays, demanding a higher score (e.g., 640 or 660) or a newer model like FICO 9 or 10, but they still rely on one score, not a blend.
• Ask the lender which FICO version they'll use before you pull credit; this prevents surprises when you later examine other credit factors and rate band impacts.

The FICO score sets the floor, but lenders also examine the details behind that number.

• Payment history - on‑time payments weigh most heavily; even a single 30‑day miss can offset a 640 score.
• Credit utilization - balances above 30 % of limits raise risk flags, regardless of the overall score.
• Length of credit history - a short or recently opened account profile makes a high score less persuasive.
• Credit mix - having revolving, installment and retail accounts shows capacity to manage different debt types.
• Recent inquiries and new accounts - multiple hard pulls or several new lines in the past 12 months suggest financial stress.
• Derogatory marks - collections, charge‑offs, bankruptcies or tax liens stay on the report for years and often outweigh a modest score bump.

These elements can tip a loan decision when your FICO hovers near the 620 baseline. Lenders may offset a lower score with a clean payment record or strong credit mix, just as they can tighten standards if recent activity looks risky. Understanding which factors they prioritize helps you target improvements before you hit the application stage and prepares you for the next section on how rates shift across FICO bands.

Mortgage rates climb as your FICO score falls, typically adding 30‑60 basis points for every 20‑point drop below the 720‑plus sweet spot. At the 620 baseline - the minimum Fannie Mae/Freddie Mac threshold - average 30‑year fixed rates sit around 6.75% in the 2023‑2024 market, roughly a half‑percentage point higher than the 6.20% seen by borrowers scoring 720‑739.

A bigger down payment can directly compensate for a lower FICO score when you apply for a conventional loan. Lenders view a higher equity stake as reduced risk, so they often accept scores at the 620 baseline (the Fannie Mae/Freddie Mac minimum) or even a few points below if the borrower puts enough cash down, and they may also lessen or waive lender overlays that would otherwise block the loan.

For example, a borrower with a 610 FICO score might need to put 20 % cash down to qualify at a 6 % rate, whereas the same score with only 5 % down could trigger a higher rate (6.5 % - 7 %) and mandatory private mortgage insurance. Raising the down payment to 15 % often brings the rate back to the 6 % range and eliminates the PMI requirement, making the loan more affordable while you work on credit improvement. This strategy bridges the gap before you implement the '5 quick moves' discussed in the next section.

Raise your FICO score fast with these five actions before you submit a conventional‑loan application. The baseline for most Fannie Mae and Freddie Mac loans is a 620 score, but many lenders overlay higher cut‑offs, so every point counts.

1. Check and dispute errors - Pull your free annual credit reports from the three bureaus, scan for inaccurate late payments or balances, and file a dispute online. Corrections can lift a score by 20‑30 points within 30 days.
2. Pay down revolving debt - Reduce credit‑card utilization below 30 % of each limit, ideally under 10 %. A $5,000 balance on a $15,000 limit can drop 40 points; paying it down to $1,500 often adds 15‑20 points.
3. Eliminate a small 'hard' inquiry - If a recent inquiry was for a credit‑card you never opened, ask the lender to remove it; each removed inquiry can recover 3‑5 points.
4. Become an authorized user - Get added to a relative's long‑standing, low‑utilization card. The secondary account's positive history clones onto your report, sometimes adding 10‑15 points instantly.
5. Timing of payments - Shift credit‑card bills to be due a day after your payday and automate on‑time payments. Consistently on‑time history over the next 2 - 3 months can raise a score by 5‑10 points without any extra cost.

These moves target the most influential FICO factors - payment history, credit utilization, and recent inquiries - so you'll be closer to, or above, the 620 threshold before you apply.

You can still qualify for a conventional loan when your FICO score falls below the 620 baseline if you bring strong compensating factors to the table.

• 30 %+ down payment - Lenders often overlook a sub‑620 score when you put down at least 30 % of the purchase price, because the equity cushions their risk.
• Very low debt‑to‑income ratio - A DTI under 20 % (sometimes under 15 %) demonstrates that you can service the mortgage despite a weaker credit score.
• Substantial cash reserves - Holding three to six months of principal, interest, taxes, and insurance (PITI) in liquid assets signals repayment ability and can offset a low score.
• Co‑borrower with strong credit - Adding a spouse or partner whose FICO is well above 720 lets the lender average the credit profile, enabling the loan.
• Portfolio or credit‑union loan - Some banks keep the loan in‑house rather than selling it on the secondary market; they may relax the 620 rule if your overall financial picture is solid.

These scenarios let you sidestep the typical 620 minimum while still meeting lender requirements.

Choose FHA or a non‑QM loan whenever your FICO score, down‑payment amount, or debt‑to‑income ratio makes conventional financing unattractive.

Key breakpoints:

• FICO ≥ 620 but below the lender's overlay (often 640‑660) → conventional rates rise sharply; FHA (580 + 3.5% down) or non‑QM (500 + 10% down) can be cheaper.
• FICO < 580 → only FHA (500 with 10% down) or non‑QM (often 500 + higher rate) remain viable.
• Down payment < 5% → FHA's low‑down‑payment option usually beats a conventional loan that would require 5‑10% to offset risk.
• DTI > 45% or non‑traditional income → non‑QM products often ignore those limits, while conventional lenders may reject the file.

If any of the above conditions apply, run an FHA or non‑QM scenario before committing to a conventional offer; the next section shows the exact questions to ask lenders about overlays and score rules.

Here are the key questions to ask lenders about overlays and score rules.

• What is your minimum FICO score for a conventional loan, and does it exceed the 620 baseline set by Fannie Mae's conventional loan eligibility?
• Do you apply any automatic overlays (e.g., 640 or 660) for borrowers with a 620 - 639 FICO, regardless of other strengths?
• If you require a higher overlay, can a larger down payment, lower debt‑to‑income, or a co‑borrower offset the lower score?
• How do recent credit inquiries, a thin file, or a single derogatory mark affect your overlay decision?
• Are there hard‑stop rules that reject applicants outright below a certain FICO band, even with compensating factors?
• What specific credit‑score‑related metrics (such as loan‑to‑value or debt‑to‑income thresholds) can mitigate an overlay requirement?
• Do you periodically review or waive overlays for first‑time homebuyers or high‑net‑worth clients?