You’re sitting at your kitchen table in Richmond or Chesapeake, laptop open, trying to figure out what it actually takes to qualify for a conventional loan. You’ve read three different websites and gotten three different answers. One says you need a 640 credit score. Another says 680. A third mentions something about DTI ratios and conforming limits without explaining what any of it means.
Sound familiar? The confusion is understandable. Conventional loan requirements involve several moving parts — credit score, debt-to-income ratio, down payment, property type, and loan limits — and the details matter. Getting them wrong costs time, money, and sometimes the house you wanted.
This guide cuts through the noise. You’ll find real numbers drawn from Fannie Mae and Freddie Mac guidelines, comparison tables, and worked math so you can see exactly where you stand before you ever talk to a lender. Think of it as your pre-application checklist, written to inform rather than to sell.
Article by Duane Buziak, Mortgage Maestro, NMLS#1110647. Licensed in VA, FL, TN, and GA. All rate examples and payment figures in this article are illustrative and hypothetical only. They do not constitute a commitment to lend or an offer of specific loan terms.
Conventional vs. FHA, VA, and USDA: Understanding the Core Differences
A conventional loan is simply a mortgage that is not insured or guaranteed by a federal government agency. Instead, most conventional loans are underwritten to guidelines set by Fannie Mae or Freddie Mac, the two government-sponsored enterprises that purchase mortgages from lenders in the secondary market. Because there is no government guarantee backing the loan, lenders apply stricter baseline standards — and borrowers with stronger profiles tend to benefit most.
Government-backed programs work differently. FHA loans are insured by the Federal Housing Administration, which allows lenders to accept lower credit scores and smaller down payments. VA loans are guaranteed by the Department of Veterans Affairs and are available exclusively to eligible veterans, active-duty service members, and qualifying surviving spouses — with no down payment required in most cases. USDA loans are backed by the U.S. Department of Agriculture and are limited to eligible rural and suburban areas with income considerations. You can verify current FHA guidelines at HUD.gov, VA loan details at VA.gov, and USDA eligibility at USDA.gov.
Here is how the four major loan types compare on the factors that matter most to Virginia homebuyers in 2026:
Loan Type Comparison Table
Conventional: Min Credit Score 620 | Min Down Payment 3% (primary residence) | Mortgage Insurance: PMI required above 80% LTV, cancellable | 2026 Baseline Loan Limit $806,500 (verify current figure at FHFA.gov before closing)
FHA: Min Credit Score 580 (3.5% down) or 500 (10% down) | Min Down Payment 3.5% | Mortgage Insurance: Upfront MIP + annual MIP, typically for life of loan | Loan Limit varies by county
VA: No official minimum (lenders typically require 580-620) | Min Down Payment 0% for eligible borrowers | Mortgage Insurance: No PMI; funding fee applies | No statutory loan limit for eligible borrowers with full entitlement
USDA: Min Credit Score 640 (most lenders) | Min Down Payment 0% in eligible areas | Mortgage Insurance: Upfront guarantee fee + annual fee | Loan limits apply based on area
Conventional loans tend to be the stronger choice when you have a credit score above 720, when you want the ability to cancel mortgage insurance, when you are purchasing a second home or investment property, or when the property type does not meet FHA or VA standards. If your credit score is below 660 or your down payment is limited, one of the government-backed programs may offer a more accessible path. The right answer depends on your specific numbers, not a general rule.
Credit Score, DTI, and Income: The Three Pillars That Determine Your Approval
Conventional loan underwriting comes down to three interconnected factors. Lenders call them the qualification trifecta: credit score, debt-to-income ratio, and income documentation. Weakness in one can sometimes be offset by strength in another, but all three need to clear minimum thresholds.
Credit Score Thresholds
The minimum credit score for most conventional loans is 620, per Fannie Mae’s Selling Guide. But clearing the minimum and getting a competitive rate are two different things. Conventional pricing uses a tiered system called loan-level price adjustments (LLPAs), where your rate and fees shift based on your credit score and loan-to-value ratio. In practical terms, a borrower at 620 will pay meaningfully more than a borrower at 740 on the same loan amount. For strategies on securing the most competitive pricing, see our guide on conventional loan rates.
The table below illustrates how credit score tiers affect estimated monthly payments on a $350,000 loan in Virginia. These figures are hypothetical and illustrative only. They are not rate quotes or commitments to lend. Actual rates vary based on market conditions, lender, loan structure, and individual borrower profile.
Credit Score 620-639: Illustrative Rate ~7.625% | Est. Monthly P&I ~$2,474
Credit Score 640-679: Illustrative Rate ~7.250% | Est. Monthly P&I ~$2,388
Credit Score 680-719: Illustrative Rate ~6.875% | Est. Monthly P&I ~$2,300
Credit Score 720-739: Illustrative Rate ~6.625% | Est. Monthly P&I ~$2,242
Credit Score 740+: Illustrative Rate ~6.375% | Est. Monthly P&I ~$2,184
The difference between a 620 score and a 740+ score on a $350,000 loan is approximately $290 per month in this illustration. Over 30 years, that compounds into a significant sum. Improving your credit score before applying is often the highest-return preparation step a borrower can take.
Debt-to-Income Ratio
Your debt-to-income ratio (DTI) is the percentage of your gross monthly income consumed by all monthly debt obligations, including your proposed housing payment. Fannie Mae’s standard maximum DTI is 45%, with exceptions possible up to 50% when strong compensating factors are present, such as substantial reserves, a high credit score, or significant equity. Most lenders apply conservative overlays, so qualifying at 50% DTI requires a genuinely strong overall file.
Here is the simple math: if your gross monthly income is $8,000, your maximum total monthly debt (including the new mortgage payment) at 45% DTI is $3,600. If your existing car payment, student loans, and credit card minimums total $600 per month, your maximum mortgage payment is $3,000. A mortgage affordability calculator can help you run these numbers quickly for your own situation.
Income Documentation
W-2 employees typically need two years of employment history and recent pay stubs. Self-employed borrowers generally need two years of tax returns, and income is calculated from net earnings after deductions, which often produces a lower qualifying figure than gross income. Lenders also review bank statements, investment accounts, and any other assets that demonstrate ability to sustain payments.
Vantage Score 4.0 and NoTouch Credit Pre-Qualification
Many lenders, including large direct lenders like Rocket Mortgage and Freedom Mortgage, pull a tri-merge hard credit inquiry at first contact. That hard pull is recorded on your credit file and can temporarily lower your score. The Mortgage Ally uses a soft-pull Vantage Score 4.0 model for pre-qualification, which means your credit file is reviewed without triggering a hard inquiry. You can see where you stand on credit score, estimated rate tier, and rough qualification range without any impact to your score. This is a structural process difference worth understanding when you are early in the exploration phase.
Down Payment Tiers, PMI Costs, and the Breakeven Math That Matters
One of the most persistent myths in homebuying is that you need 20% down to buy a home with a conventional loan. You do not. But every down payment tier carries different costs, and understanding those costs before you commit is essential.
Down Payment Options on a $400,000 Virginia Home
3% down (Conventional 97): Down payment $12,000 | Loan amount $388,000 | PMI required: Yes
5% down: Down payment $20,000 | Loan amount $380,000 | PMI required: Yes
10% down: Down payment $40,000 | Loan amount $360,000 | PMI required: Yes
15% down: Down payment $60,000 | Loan amount $340,000 | PMI required: Yes
20% down: Down payment $80,000 | Loan amount $320,000 | PMI required: No
PMI rates vary based on credit score, LTV, and the insurer. For this illustration, assume a borrower with a 720 credit score at 90% LTV pays approximately $125 per month in PMI on a $360,000 loan. That is a reasonable mid-range estimate for illustration purposes only. Actual PMI costs vary by insurer and borrower profile. For a deeper look at low down payment mortgage strategies, we cover additional options in a separate guide.
Breakeven Math: 10% Down vs. Waiting for 20%
Here is the scenario: You have $40,000 saved. You can put 10% down on a $400,000 home now, or continue renting while saving the additional $40,000 needed to reach 20% down.
All figures below are hypothetical and illustrative. Home price appreciation is assumed for calculation purposes only and is not a prediction or guarantee of future value.
Option A: Buy now with 10% down. You pay PMI of approximately $125/month. PMI automatically terminates under the Homeowners Protection Act when your loan balance reaches 78% of the original purchase price, which on a $400,000 home is $312,000. On a standard amortization schedule at an illustrative 6.625% rate, a $360,000 loan reaches $312,000 in approximately 8.5 years through regular payments alone. You can request PMI removal at 80% LTV ($320,000 balance) earlier, provided you have a good payment history and the lender confirms current value supports it.
Total PMI cost at automatic termination (approximately 102 months at $125/month): ~$12,750.
Option B: Wait and save 20% down. Assume you need 24 months to save the additional $40,000. During those 24 months, you continue paying rent. Assume rent of $1,800/month in the Richmond or Chesapeake market (hypothetical). Total rent paid during the waiting period: $43,200. Additionally, if the $400,000 home appreciates at a hypothetical 3% annually during those 24 months, the home would be priced at approximately $423,600 at purchase. Your required 20% down payment would then be approximately $84,720 instead of $80,000, requiring additional savings.
The comparison: Option A costs approximately $12,750 in total PMI over 8.5 years before automatic termination. Option B costs approximately $43,200 in rent over 24 months, plus a higher purchase price and larger required down payment. In this hypothetical illustration, waiting for 20% down carries a higher total cost than buying with 10% down and paying PMI.
This math changes based on your specific rent, local appreciation trends, and how quickly you can save. The point is not that 10% down is always right. The point is that you need to run the actual numbers for your situation rather than defaulting to a rule of thumb.
PMI Removal Rules
Under the federal Homeowners Protection Act (HPA), your servicer must automatically cancel PMI when your loan balance reaches 78% of the original purchase price, based on your scheduled payments. You can request cancellation earlier, at 80% LTV, if you have a good payment history and the property value supports the request. This is fundamentally different from FHA’s mortgage insurance premium (MIP), which typically continues for the life of the loan regardless of equity, making conventional loans with PMI a structurally more flexible option for borrowers who build equity over time.
Property Types, Appraisals, and Virginia Market Factors
Not every property qualifies for conventional financing under standard guidelines, and Virginia’s diverse geography introduces specific considerations that buyers in other states may not face.
Eligible Property Types and Their Requirements
Single-family primary residence: Standard requirements apply. Minimum 3% down, 620 credit score.
Condominiums: Must be “warrantable” under Fannie Mae/Freddie Mac guidelines, meaning the HOA meets specific financial, insurance, and ownership concentration requirements. Non-warrantable condos require portfolio or non-QM financing. Short Pump and Glen Allen communities with active HOAs generally meet warrantability standards, but verification is required on each project.
2-4 unit properties: Minimum 15-25% down depending on occupancy. Rental income from other units may be counted toward qualifying income with documentation.
Second homes: Minimum 10% down. Must be a reasonable distance from primary residence and not rented full-time.
Investment properties: Minimum 15% down for single-unit, higher for multi-unit. Stricter reserve requirements typically apply (often 6 months of PITIA). Our guide on securing the best investment property loan covers these requirements in greater detail.
Appraisal Standards
Conventional appraisals are generally less prescriptive than FHA appraisals. FHA appraisers are required to flag health and safety issues as a condition of loan approval. Conventional appraisals focus primarily on market value rather than property condition, though obvious structural issues will still be noted. This distinction matters when purchasing older homes in markets like Richmond’s historic neighborhoods or rural properties in Hanover and Caroline County.
Virginia-Specific Factors
Hampton Roads, Chesapeake, Virginia Beach, and low-lying Tidewater areas carry meaningful flood zone exposure. Flood insurance is not part of a conventional loan’s base requirements, but lenders will require it when the property sits in a FEMA-designated Special Flood Hazard Area. In some Hampton Roads zip codes, flood insurance premiums can be substantial and should be factored into total housing cost calculations. Understanding the full picture of mortgage closing costs helps you budget accurately for these additional expenses.
Rural properties in Goochland, Louisa, and Caroline County frequently use well water and septic systems rather than municipal utilities. Conventional guidelines do not automatically require well and septic testing the way FHA does, but many lenders apply overlays requiring inspections, particularly in areas where these systems are common.
On conforming loan limits: the 2025 FHFA baseline limit was $806,500. Virginia counties outside the Northern Virginia/DC metro area (which we do not serve) generally fall at the baseline conforming limit. Verify the current 2026 limit directly at FHFA.gov before application, as limits are adjusted annually. Loans above the conforming limit require jumbo financing, which carries different underwriting standards and typically requires larger down payments and stronger reserves. For borrowers in that range, our guide on jumbo loan rates explains what to expect.
Mortgage Broker vs. Direct Lender: A Structural Comparison for Virginia Buyers
How you access a conventional loan matters as much as which loan you get. The two primary channels are mortgage brokers and direct lenders, and they operate very differently.
A mortgage broker is licensed to submit your loan to multiple wholesale lenders simultaneously. The Mortgage Ally, for example, shops across hundreds of wholesale lenders to find competitive rates and terms for your specific profile. A direct lender, by contrast, offers only its own products. When you apply with Rocket Mortgage, Freedom Mortgage, or PennyMac, you are receiving that company’s rate on that day, with no simultaneous comparison across competitors. For a deeper dive into how to compare mortgage lenders effectively, we break down the evaluation process in a separate guide.
Here is how the two channels compare across the factors Virginia buyers care about most:
Rate Shopping: Mortgage Broker — shops hundreds of lenders simultaneously for your profile | Direct Lender — offers only their own products | Credit Union — typically one rate from one institution
Product Variety: Mortgage Broker — conventional, FHA, VA, USDA, jumbo, non-QM, bank statement, DSCR | Direct Lender — products vary; generally limited to their own approved programs | Credit Union — typically conventional and limited government programs
Credit Pull Policy: Mortgage Broker (The Mortgage Ally) — soft-pull Vantage Score 4.0 for pre-qualification, no hard inquiry | Direct Lenders — most pull hard tri-merge at application | Credit Union — varies
Local Virginia Knowledge: Mortgage Broker — direct knowledge of Virginia county-level factors, flood zones, well/septic markets | Direct Lenders — national operations; local knowledge varies by loan officer | Credit Union — strong local relationships, limited product range
Speed: Mortgage Broker (The Mortgage Ally) — fastest close times; 24/7 availability | Direct Lenders — timelines vary; large national lenders can be slower in high-volume periods | Credit Union — generally slower due to manual processing
Honest Comparisons with Virginia-Area Lenders
Several strong lenders operate in the Virginia market. Movement Mortgage and Atlantic Bay Mortgage are direct lenders with Virginia presence and strong reputations for service. Alcova Mortgage and Fairway Independent Mortgage are well-established direct lenders serving Virginia buyers with experienced loan officers. CapCenter is a Virginia-based lender and realty hybrid that bundles services and offers competitive pricing. These are legitimate options worth evaluating.
The structural difference is this: each of these lenders offers their own products at their own rates. When you work with a mortgage broker, your file is presented to multiple wholesale lenders at the same time, and the resulting competition can produce better terms than any single lender’s retail offering. Our guide on finding the best mortgage brokers in Virginia explains how to evaluate this channel in more detail. This is not a judgment about service quality. It is a description of how the two models work.
In competitive Virginia markets like Richmond, Fredericksburg, and Williamsburg, where multiple-offer situations are common, speed and certainty matter. The Mortgage Ally’s 24/7 availability and fastest close times are designed for exactly these situations, where a pre-qualification letter needs to be in hand before the weekend showing and a clear-to-close needs to happen before the competing offer does.
Conventional Loan Requirements: Frequently Asked Questions
Q: What credit score do I need for a conventional loan in Virginia?
A: The minimum credit score for most conventional loans is 620, per Fannie Mae guidelines. However, your rate and cost improve significantly at 680, 720, and 740+. If your score is below 620, FHA or other programs may be worth exploring. See the credit score tier table above for how scores affect payment on a $350,000 loan.
Q: Can I get a conventional loan with 3% down?
A: Yes. The Conventional 97 program allows 3% down on a primary residence. You will pay PMI until your loan balance reaches 80-78% of the original purchase price. The PMI breakeven math above shows how this compares to waiting for a larger down payment.
Q: How is a conventional loan different from a conforming loan?
A: A conforming loan is a type of conventional loan that meets Fannie Mae and Freddie Mac’s size and guideline requirements, including the annual loan limit set by the FHFA. All conforming loans are conventional, but not all conventional loans are conforming. Loans above the conforming limit are called jumbo loans and require different underwriting.
Q: Can I use a conventional loan for an investment property in Virginia?
A: Yes. Conventional loans are available for investment properties in Virginia, including single-family rentals and 2-4 unit properties. Expect a minimum 15% down payment on a single-unit investment property, stricter reserve requirements (often 6 months of PITIA), and slightly higher rates than a primary residence loan. FHA and VA loans generally cannot be used for investment properties.
Q: How long does conventional loan approval take?
A: Timeline varies by lender and market conditions. A well-prepared file with complete documentation can move from application to clear-to-close in as few as 15-21 days with an efficient lender. Delays typically come from appraisal scheduling, title work, or incomplete documentation rather than underwriting itself. Our guide on the mortgage approval process walks through each step in detail.
Q: Can I get pre-qualified for a conventional loan without a hard credit pull?
A: Yes, through The Mortgage Ally’s NoTouch Credit pre-qualification process. Using Vantage Score 4.0 soft-pull technology, you can receive a preliminary qualification assessment without any hard inquiry on your credit file. This lets you understand your rate tier and qualification range before committing to a formal application.
Q: What is the 2026 conforming loan limit for Virginia?
A: The 2025 FHFA baseline conforming loan limit was $806,500. For the current 2026 limit, verify directly at FHFA.gov, as limits are adjusted annually. Virginia counties outside high-cost metro areas generally fall at the baseline limit.
Your Quick-Reference Checklist and Next Steps
Here is a summary of the key conventional loan qualification benchmarks covered in this guide. Use this as your personal checklist before you begin the application process.
Credit Score: 620 minimum to qualify; 740+ for best pricing. Check your score without a hard inquiry using NoTouch Credit pre-qualification.
Debt-to-Income Ratio: 45% maximum for most approvals; up to 50% possible with strong compensating factors. Calculate your DTI before applying: add all monthly debt payments plus proposed housing payment, then divide by gross monthly income.
Down Payment: 3% minimum on primary residence (Conventional 97); 10% for second homes; 15-25% for investment properties. 20% eliminates PMI entirely. Run your own breakeven math using the framework above.
Income Documentation: Two years of W-2s and pay stubs for employees; two years of tax returns for self-employed borrowers. Have these documents organized before you begin.
Property Type: Confirm the property is warrantable (for condos), eligible for conventional financing, and not in a flood zone that would require additional insurance costs beyond your budget.
Loan Limits: Confirm the current FHFA conforming limit at FHFA.gov. Loans above the limit require jumbo financing with different standards.
Understanding these requirements puts you in control of the process. You are not waiting for a lender to tell you what you can afford. You know your numbers going in.
A logical first step is a NoTouch Credit pre-qualification through The Mortgage Ally, which gives you a clear picture of your rate tier, estimated qualification range, and loan options across hundreds of lenders, with no hard inquiry and no impact to your credit score. From there, you can compare options, run your own math, and make an informed decision about the right loan structure for your situation.
To learn more about conventional loan options, pre-qualification, and how The Mortgage Ally serves homebuyers across Virginia, Florida, Tennessee, and Georgia, visit The Mortgage Ally online.
Legal Disclaimer: This article is for educational purposes only and does not constitute an offer to lend or a commitment to provide financing. All rate examples, payment figures, and breakeven calculations in this article are hypothetical and illustrative only. Actual rates, terms, and qualification outcomes depend on individual borrower circumstances, market conditions, and lender criteria at the time of application. Home price appreciation assumptions used in breakeven examples are not predictions or guarantees of future value. Private mortgage insurance costs are illustrative estimates only; actual PMI rates vary by insurer and borrower profile. Conforming loan limits are subject to annual adjustment by the FHFA; verify current limits at FHFA.gov before application. The Mortgage Ally is licensed in Virginia, Florida, Tennessee, and Georgia. This content does not target borrowers in any other state. NMLS#1110647.
Author: Duane Buziak, Mortgage Maestro, NMLS#1110647 | The Mortgage Ally
