What's the Minimum Credit Score for a Conventional Loan in 2026?

You've probably heard some version of this: "conventional loans don't have a minimum credit score anymore." As of late 2025, that's actually true at the agency level, Fannie Mae's Desktop Underwriter and Freddie Mac's Loan Product Advisor both dropped their long-standing 620 floor for automated approvals. It sounds like great news for anyone with a lower score.

In practice, it changes a lot less than the headline suggests. Here's what's actually happening, and why a technical "yes" from an automated system doesn't necessarily mean conventional is your best or even cheapest option.

What Actually Changed

For loans run through Fannie Mae's DU or Freddie Mac's LPA, there's no longer a hard credit score cutoff built into the system itself. Instead, these systems evaluate your full risk profile, credit history, reserves, debt-to-income ratio, and more, rather than rejecting a file purely because a score falls below 620.

That's a real, meaningful policy change. But three things haven't changed alongside it, and together they explain why 620 is still the practical number most borrowers should plan around:

• Manually underwritten conventional loans still generally require a 620 minimum. The change only applies to files run through automated underwriting.
• Most lenders still apply their own overlay at or near 620, regardless of what the agency's system technically allows.
• Private mortgage insurers can still set their own minimums, and this is the piece that trips people up most.

The Real Floor: Getting PMI, Not Getting Approved

Here's the part that matters most if you're putting down less than 20%. Even if an automated system approves your file with a lower score, you still need private mortgage insurance to actually close the loan, and PMI companies run their own underwriting on top of the agency's. If a mortgage insurer won't cover your file at your score, the loan doesn't happen, regardless of what Fannie Mae or Freddie Mac's system said.

This is why 620 remains the number worth planning around in practice, even though it's no longer a hard rule on paper. It's less a rule and more a convergence of lender caution and insurer requirements that all point to roughly the same place.

Even If You Qualify, PMI Cost Changes the Math Entirely

This is the part that gets skipped in most "no minimum score" conversations, and it's arguably more important than whether you technically qualify at all. Private mortgage insurance isn't a flat fee. It's priced almost entirely off your credit score, and the spread is enormous.

According to Urban Institute data, PMI on a conventional loan typically runs between roughly 0.46% and 1.50% of the loan amount per year for a fairly typical profile. But that's really the middle of the range, not the edges. Stack strong compensating factors together, a high credit score, a low debt-to-income ratio, and a bigger down payment (say 10% instead of 3-5%, which lowers your loan-to-value), and PMI can drop as low as roughly 0.10% to 0.20%. Weaken any of those same factors and it climbs well past 1.50%. Credit score does the most work in that swing, but it's not acting alone, DTI and down payment size compound the effect in both directions.

Put in real terms: on a $400,000 loan, that full spread is the difference between roughly $70 a month in PMI for a strong overall profile and $500 a month or more for a weak one, for identical loan terms. That's not a rounding error, it's a meaningfully different monthly payment, and it's on top of whatever rate difference your score also creates.

Where FHA Actually Wins, Even With Its Upfront Fee

This is the comparison most people never run, and it's the one that actually matters if your score is in the 600s. FHA's mortgage insurance is priced very differently, it doesn't swing based on your credit score the way conventional PMI does. That means at lower credit scores, FHA's mortgage insurance can end up cheaper than conventional PMI overall, even after accounting for FHA's upfront premium.

The crossover tends to land somewhere in the high 600s to low 700s. Above that range, conventional PMI is usually the better deal, since it's cheap at high scores and cancels once you reach enough equity. Below that range, conventional PMI's cost climbs steeply while FHA's insurance stays flat, and FHA increasingly comes out ahead on total monthly cost, sometimes by a meaningful margin.

So a technical conventional approval at a 620 or 640 score isn't automatically the right move even when it's available. If your score is in that range, it's worth running both scenarios side by side rather than assuming "approved" means "best option." For the fuller comparison, see FHA vs. conventional in Massachusetts, and if your score is closer to the 500s than the 600s, FHA financing down to a 500 score through manual underwriting may be the more realistic path entirely.

Why This Is About Total Payment, Not Just Approval

The theme running through all of this: getting approved and getting a good deal are two different questions. A lower score might technically clear conventional underwriting now in a way it didn't before, but "cleared underwriting" says nothing about whether that's actually your cheapest path to the same house. The real number that matters is your total monthly payment, principal, interest, taxes, insurance, and mortgage insurance combined, not just whether one specific loan type will say yes.

Frequently Asked Questions

Is there really no minimum credit score for a conventional loan anymore?
For loans run through Fannie Mae's or Freddie Mac's automated underwriting systems, there's no longer a hard score cutoff built into the system as of late 2025. In practice, lender overlays and mortgage insurer requirements mean 620 is still the number most borrowers should plan around.

Can I get a conventional loan with a 580 credit score?
It's possible through automated underwriting in some cases, but finding a lender willing to proceed and a mortgage insurer willing to cover the loan at that score is difficult in practice. FHA is generally the more realistic and often cheaper path at that score range.

Why would FHA ever be cheaper than conventional if I qualify for both?
Conventional PMI is priced heavily based on credit score and can get expensive fast below the high 600s. FHA's mortgage insurance doesn't swing with your score the same way, so at lower scores it can end up costing less overall, even with its upfront premium factored in.

Does my credit score affect anything besides approval?
Significantly. It affects your interest rate, your PMI cost if applicable, and in some cases which loan programs are realistically available to you. Two borrowers with the same income and down payment can end up with very different monthly payments purely based on credit score.

The Bottom Line

The end of the hard 620 minimum on paper is a real policy shift, but it doesn't mean a lower score comes cost-free on a conventional loan. Between lender overlays, mortgage insurer requirements, and PMI pricing that climbs steeply as your score drops, the practical picture hasn't moved nearly as much as the headline suggests. The right move is running your specific numbers, both conventional and FHA, before assuming an approval is the same thing as a good deal.

Nate Moghadam | NMLS #906770 | Fairway Independent Mortgage Corporation | Company NMLS #2289 | Equal Housing Lender. This is not a commitment to lend. Credit score requirements, PMI pricing, and program guidelines are approximate, vary by lender and mortgage insurer, and are subject to change without notice. All loans subject to credit and property approval. Legal Disclosures