Current conventional mortgage rates

What is a conventional mortgage?

A conventional loan is a home loan that isn’t insured by a government agency. It’s the most popular type of mortgage in the U.S., and comes with a fixed or adjustable rate and in varying loan terms, such as 30 or 15 years.

Conventional mortgage rates are higher now than they have been in recent years, but the expectation is that they’ll decrease as 2024 progresses. Here are national rates across various types of conventional mortgages:

How are conventional mortgage rates determined? 

Mortgage lenders determine the fixed rates on conventional mortgages based on two main factors: 10-year Treasury rates and demand by investors in mortgage-backed instruments. For an adjustable-rate conventional loan, lenders look to the Secured Overnight Financing Rate (SOFR). When you borrow, a variety of factors affect the rate you pay, including your credit score, debt-to-income (DTI) ratio and loan-to-value (LTV) ratio. Here’s more on how to get the best mortgage rate.

Conventional loan requirements

Conventional loans often have stricter borrower requirements than government-insured FHA, VA and USDA loans. In general, to qualify for a conventional loan, you’ll need:

• A 620 minimum credit score
• 3%-5% minimum down payment
• Maximum 43% debt-to-income (DTI) ratio
• At least two years of consistent employment and steady income

Although these are the minimum standards, there are exceptions (for example, some lenders allow up to a 50 percent DTI ratio). As with any type of mortgage, to qualify for the best rates, you’ll need a good to excellent credit score.

Some conventional loan programs allow you to put down as little as 3 percent to 5 percent, but the tradeoff is you’ll need to pay for private mortgage insurance (PMI), a cost added on to your monthly mortgage payment. PMI protects the lender — not you — if you default on your loan, and you’ll need to pay this until you accumulate 20 percent equity in your home. If you can make at least a 20 percent down payment upfront instead, you won’t have to pay this expense.

The down payment requirement for a conventional loan can also depend on what type of property you’re financing. If you’re buying an investment property, for instance, you might be required to put down at least 15 percent.

Who should consider a conventional loan?

Consumers have a number of types of home loans to choose from. Any borrower with solid credit, low debt and established income should consider a conventional loan. They are available to first-time and trade-up homebuyers, as well as those who are downsizing. Investors in single-family or multi-family dwellings might also consider conventional mortgages. 

In contrast, borrowers with less-solid credit scores and ready cash might choose a mortgage backed by the Federal Housing Administration (FHA) or U.S. Department of Veterans Affairs (VA). These mortgages typically carry lower requirements around credit scores and down payments.

Should you get a conventional mortgage? 

If you have solid credit, low debt and steady income, consider a conventional loan. These types of mortgages are available to any well-qualified borrower, including first-time and trade-up homebuyers or those who are downsizing. You could also use a conventional loan to finance a single-family or multifamily investment property, or a vacation home.

To help you gauge whether a conventional loan is right for you, here’s how this type of mortgage stacks up against others:

Note these are standard requirements. Some lenders might be more flexible with some criteria, such as DTI ratio, especially if you have solid financials overall.

Still, conventional loans don’t work for every situation. Here are the positives and downsides:

How to get the best conventional mortgage rate

While forces in the broader economy impact conventional mortgage rates, the specific rate you’ll get is largely determined by your credit and finances. In general, the higher your credit score, down payment and income, the better your rate. Here are some steps to get the best rate possible for your situation:

• Step 1: Strengthen your credit score - Review your credit history and scores. Remember: Conventional loans have a higher credit minimum compared to other mortgage types. If your credit needs work, now’s the time to address it.
• Step 2: Determine your budget - A lender might offer you a certain loan amount, but that doesn’t mean you have to spend it. Have a good understanding of how much house you can afford. 
• Step 3: Compare rates and terms from several lenders - Rate-shop with at least three different lenders. This can help you uncover the best rates and lowest fees.
• Step 4: Get preapproved for a mortgage - Getting a mortgage preapproval is the only way to get accurate loan pricing for your specific situation. You’ll also need this when you’re ready to make offers on homes.

Meet our Bankrate experts

Written by: Jeff Ostrowski, Principal Reporter, Mortgages

I cover mortgages and the housing market. Before joining Bankrate in 2020, I spent more than 20 years writing about real estate and the economy for the Palm Beach Post and the South Florida Business Journal. I’ve had a front-row seat for two housing booms and a housing bust. I’ve twice won gold awards from the National Association of Real Estate Editors, and since 2017 I’ve served on the nonprofit’s board of directors.

Read more from Jeff Ostrowski

Edited by: Suzanne De Vita, Senior Editor, Home Lending

I’ve covered the housing market, mortgages and real estate for the past 12 years. At Bankrate, my areas of focus include first-time homebuyers and mortgage rate trends, and I’m especially interested in the housing needs of baby boomers. In the past, I’ve reported on market indicators like home sales and supply, as well as the real estate brokerage business. My work has been recognized by the National Association of Real Estate Editors.

Read more from Suzanne De Vita