Conventional Loan Guidelines

Conventional Loans — General Qualification Guidelines

Conventional loans (also referred to as agency or conforming loans) follow standardized underwriting guidelines established by Fannie Mae and Freddie Mac.

These loans are commonly used for primary residences, second homes, and eligible investment properties.

The information below is provided as a general reference only.
Final eligibility is always subject to full underwriting review.

Borrower Qualification Overview

Credit Profile

  • Requires an established and consistent credit history
  • Stronger credit profiles generally result in smoother underwriting and more favorable terms

Income Documentation

  • Verifiable and stable income is required
  • Common documentation includes:
    • W-2 wages or salary
    • Self-employment income supported by tax returns
  • Income must be reasonably expected to continue

Debt-to-Income (DTI)

  • Monthly debt obligations are reviewed in relation to gross income
  • Lower DTI ratios generally strengthen approval outcomes
  • Borderline DTI scenarios may require compensating factors

Assets & Reserve Guidelines

Down Payment

Down payment requirements vary based on occupancy, loan amount, and borrower profile.

Typical expectations differ for:

  • Primary residences
  • Second homes
  • Investment properties

Reserves (Post-Closing Liquidity)

Reserves are measured as the number of months of housing payments available after closing (principal, interest, taxes, insurance, and HOA if applicable).

Typical general guideline ranges:

  • Primary Residence
    • 3–6 months of reserves
  • Second Home
    • 3–6 months of reserves
  • Investment Property
    • 6–12 months of reserves

Higher loan amounts, multiple financed properties, or layered risk factors may require additional reserves.

Property Considerations

Conventional loans evaluate:

  • Property type and intended occupancy
  • Appraisal and property condition
  • Conformity with agency standards

Certain properties or scenarios may require additional documentation or review.

Important Note

Guidelines may change and can vary by lender, market conditions, and individual borrower profile. This information is provided for general reference only and does not constitute a loan approval or commitment.