Conventional loans typically require a minimum credit score of 620. However, borrowers with scores above 740 often secure the most favorable interest rates and lowest mortgage insurance premiums.

Lenders need to verify your steady income to ensure you can manage monthly payments. Expect to provide your last two years of W-2s, recent pay stubs, and potentially tax returns if you have self-employment or variable income.

While 20% is the standard to avoid private mortgage insurance (PMI), many conventional loans allow as little as 3% down for first-time buyers. Acceptable funds can come from personal savings, proceeds from selling another property, or verified gift funds from a family member.

Your DTI ratio compares your minimum monthly debt obligations to your gross monthly income. The ideal maximum for conventional loans is usually 36%, though some lenders may allow up to 45% or 50% with strong compensating factors like a high credit score or substantial cash reserves.

Reserves are liquid assets left over in your bank account after covering your down payment and closing costs. Depending on your credit profile, property type, and DTI, you may be required to show anywhere from 2 to 6 months' worth of mortgage payments in reserve.