Conventional Loan With Bad Credit? Below 620, the answer is a number, not a no.
Every guide online tells you a conventional loan needs 620 credit — and then stops. Here’s what they leave out: below 620, specific exception paths exist, and they run on down payment and equity instead of your score. This page states them plainly, because a rule with a published exception is a plan, not a rejection.
- Below 620 purchase: 20%+ down on a home you’ll live in, 30%+ down on an investment property, can proceed
- Below 620 refinance: proceeds when your balance is under 65% of the home’s value
- At 620+: from 3% down for first-time buyers, 5% standard — with PMI you can actually remove
- No hard credit pull to see your options
Written by the Cap Rate Funding team, Irvine, CA · Last reviewed: August 27, 2026 · Questions? Call/text 949-738-9770
Cap Rate Funding (powered by Federal First Lending LLC, NMLS #2381991) is an Irvine, California brokerage offering conventional loans in 21 states — 620+ credit standard, from 3% down for first-time buyers, with published below-620 exception paths: purchases with 20% down (owner-occupied) or 30% down (investment), and refinances with the existing balance under 65% of appraised value. Rated 5.0 on Google by real clients.
The 620 rule — and its three exceptions
Standard lane (620+): first-time buyers from 3% down, 5% standard, conforming limits, cash-out refinancing to 80% LTV on a primary home and 75% on investment property. Exception one — purchase, owner-occupied: below 620, a purchase of the home you’ll live in can proceed with 20% or more down; the equity you bring compensates for the score. Exception two — purchase, investment: below 620, 30% or more down can carry an investment purchase. Exception three — refinance: below 620, the existing balance must be under 65% of appraised value; above that line it’s an honest decline — and usually a pivot to FHA (which accepts below-620 refinances at any LTV) or, on a primary home in an eligible state, a Home Equity Agreement.
The PMI advantage nobody explains
Conventional mortgage insurance is removable at 20% equity — and there’s none at all at 80% LTV or below. FHA’s insurance, at maximum LTV, lasts the life of the loan. That single difference is why a borrower who qualifies for both usually does better conventional, and why a borrower who starts FHA often refinances into conventional once equity and credit allow. We run both quotes side by side and show you the crossover point.
The program in plain numbers
| Term | Conventional at Cap Rate Funding |
|---|---|
| Standard minimum credit | 620 |
| Below-620 purchase (owner-occupied) | Proceeds with 20%+ down |
| Below-620 purchase (investment) | Proceeds with 30%+ down |
| Below-620 refinance | Proceeds with balance under 65% of appraised value |
| Down payment at 620+ | From 3% (first-time buyers); 5% standard |
| Mortgage insurance | Removable at 20% equity; none at 80% LTV or below |
| Cash-out refinance | 80% LTV primary · 75% investment |
| Where offered | 21 states — see the list |
Common questions
Can I get a conventional loan with a credit score below 620?
Sometimes — through published exception paths, not wishful thinking. A purchase can proceed below 620 with 20%+ down (owner-occupied) or 30%+ down (investment). A refinance can proceed when the existing balance is under 65% of appraised value. Outside those lines, FHA or an HEA is usually the honest pivot — and we offer both.
Conventional vs. FHA — which should I choose?
If you qualify for both, conventional usually wins on insurance: PMI is removable at 20% equity and absent at 80% LTV, while FHA’s MIP at maximum LTV lasts the loan’s life. FHA wins on credit flexibility — down to 580 at 3.5% down, and 500–579 with 10% down. We quote both and show the crossover.
How much down for a first-time buyer?
From 3% down at 620+ credit for first-time buyers; 5% is standard otherwise. Conforming loan limits apply.
When does PMI come off a conventional loan?
At 20% equity it’s removable — and at 80% LTV or below there’s none from day one. That removability is conventional’s structural edge over FHA’s life-of-loan MIP at max LTV.
Can I do a conventional cash-out refinance?
Yes — up to 80% LTV on a primary residence and 75% on investment property, at 620+ credit. Below 620, the refinance exception (balance under 65% of value) applies, or FHA’s any-LTV below-620 refinance path may fit.
Will checking my options hurt my credit?
No — a soft credit review only. A hard inquiry happens later, with your permission, only if you move forward.
Not a commitment to lend. Exception paths are underwritten case by case; programs and availability change without notice. All loans subject to credit approval. Equal Housing Opportunity.