Maybe you’ve worked hard on your credit and saved a little, and now you’re wondering if the “standard” mortgage is within reach. For a lot of Wisconsin buyers with solid credit, it absolutely is — and a conventional loan often ends up costing less over time than the alternatives.
I’m Adam Zeman, a licensed loan officer with 15+ years in Wisconsin mortgages. Let me walk you through the conventional loan requirements in plain English — the credit, the down payment, the insurance that actually goes away — with real dollars so you can see where you stand.
What are the conventional loan requirements?
In short, they reward strong credit and a stable financial picture. Because a conventional loan isn’t backed by a government agency, lenders lean more on your credit and income — but in return, it offers benefits FHA can’t. Here’s the quick picture.
| Requirement | Typical standard |
|---|---|
| Credit score | Usually 620 or higher |
| Down payment | 3% (first-time buyers) to 5%+ |
| Debt-to-income ratio (DTI) | Generally under ~45% |
| Income | Steady, documented, usually two years |
| Property | Primary, second home, or investment |
What credit score do conventional loan requirements need?
Generally 620 is the starting line, and the higher you go, the more you save. Unlike FHA, conventional pricing rewards credit heavily, so a strong score earns both a lower rate and cheaper mortgage insurance. In other words, the same loan costs a 760-score buyer noticeably less than a 640-score buyer.
So if your credit sits in the mid-600s or higher, a conventional loan is worth a close look — and if it’s a bit below, a small bump before you apply can pay off quickly.
How much down payment do conventional loan requirements call for?
Less than the old myth suggests. First-time buyers can put down as little as 3%, and repeat buyers usually start at 5%. On a $250,000 home, 3% is $7,500 and 5% is $12,500 — a long way from $50,000.
Naturally, a bigger down payment lowers your loan and your monthly cost, and reaching 20% skips mortgage insurance entirely. But you don’t need 20% to buy, and many strong-credit buyers choose to put less down and let the insurance fall off later.
How does conventional PMI work?
This is the conventional loan’s quiet advantage. When you put under 20% down, you pay private mortgage insurance (PMI) — but unlike FHA’s premium, it doesn’t last forever. Once you reach 20% equity, PMI drops off, and your payment gets lighter.
For example, a buyer who puts 5% down starts with PMI, then sheds it a few years later as the balance falls and the home’s value rises. Over the life of the loan, that difference can add up to real money compared with an FHA loan that keeps its insurance.
Conventional vs. FHA: which requirements fit you?
Both are excellent loans, and the choice usually comes down to your credit and your goals.
| Conventional | FHA | |
|---|---|---|
| Minimum credit | Usually 620 | 580 (3.5% down) |
| Mortgage insurance | Drops off at 20% equity | Often for the life of the loan |
| Best for | Stronger credit, long-term savings | Lower credit, smaller down |
The short version: strong credit usually points to conventional, while a lower score or tighter cash often points to FHA. I run both side by side so the choice is based on your real numbers, not a guess. For more, see my guide to conventional loans in Wisconsin.
How do you meet conventional loan requirements in Wisconsin?
The honest answer is that it starts with knowing your credit and matching it to the right lender, because pricing varies from one to the next. That’s the part I handle: I shop your file across 130+ lenders to find the best real terms for your score and down payment, and I’ll show you how conventional stacks up against your other options.
Frequently asked questions
What credit score do conventional loan requirements set?
Usually 620 or higher. A stronger score earns a lower rate and cheaper PMI, so it’s worth improving before you apply.
Can I get a conventional loan with 3% down?
Yes. In fact, if you’re a first-time buyer you can put just 3% down. Repeat buyers typically start at 5% down.
Does conventional PMI ever go away?
Yes. Once you reach 20% equity, PMI drops off automatically — a key advantage over FHA.
What DTI do I need for a conventional loan?
Generally under about 45%, though strong credit and reserves can stretch it a bit higher.
Do I need cash reserves?
Yes, sometimes — especially on higher loan amounts or investment properties. A few months of payments in the bank helps.
Can I use a conventional loan for a rental?
Yes. Also, conventional loans can finance primary homes, second homes, and investment properties, each with its own terms.
Is conventional better than FHA?
It depends on your credit. As a rule, strong credit favors conventional; a lower score often favors FHA.
How much are closing costs on a conventional loan?
Typically 2%–5% of the price, and a seller can sometimes cover part of them.
Key takeaways
- The core conventional loan requirements are a ~620 credit score and 3%–5% down.
- PMI drops off at 20% equity — the conventional loan’s biggest long-term advantage.
- Pricing rewards credit heavily, so a higher score means a lower rate and cheaper insurance.
- Also know conventional can finance primary homes, second homes, and rentals.
- Strong credit usually favors conventional; a lower score often favors FHA.
Want to see where you stand?
Let’s compare your options and find the best real terms across 130+ lenders. Grab a 15-minute call on my calendar, or call or text me at (414) 975-2654.
Adam Zeman — Licensed Mortgage Loan Originator, NMLS #870441 — Edge Home Finance, LLC, Company NMLS #891464 — 11220 W Burleigh St, Suite 174, Wauwatosa, WI 53222 — (414) 975-2654 — Book: calendly.com/adam-zeman/30min. Educational information only, not a rate quote or commitment to lend. Conventional loan guidelines, credit, down payment, and PMI vary by lender and by borrower. All loans subject to credit approval and underwriting. Equal Housing Opportunity.