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Mortgage Pre-Approval at 620 FICO: Conventional Opens Up
620 is the absolute minimum FICO for conventional financing under the Fannie Mae Selling Guide and the Freddie Mac Single-Family Guide. The program menu doubles in size at 620, but the pricing penalty (LLPAs) is still steep, and FHA remains the cheaper choice at this tier in most cases. This page explains program selection, LLPA cost, and the case for waiting to 680.
All figures as of May 2026. Rate assumptions from the Freddie Mac Primary Mortgage Market Survey.
Quick Answer at 620 FICO
FHA, 3.5% down, $80K income, $0 debts: $270,000-$290,000 pre-approval
Conventional, 10% down, same income: $255,000-$275,000 (LLPA-adjusted)
Assumes ~7.10% FHA / ~7.30% conventional, 1.1% property tax, $1,500/yr insurance. As of May 2026.
The 620 Cliff: What Newly Unlocks
At 620 you cross the published minimum for both Fannie Mae and Freddie Mac. That single-point shift opens five products that were unavailable at 619: standard 30-year conventional (3-20 percent down), HomeReady (3 percent down with income cap), Home Possible (3 percent down with income cap), high-LTV refinance (when applicable), and second-home conventional (10 percent down). On the FHA side, 620 is also the median lender overlay, meaning more retail banks will now lend without requiring a non-standard channel.
What does not change: VA still has no published minimum (most lenders overlay 580-620, so 620 is comfortably in range), USDA Guaranteed still requires 640 for streamlined GUS underwrite, and jumbo loans still require 700+ at virtually every investor.
The practical decision at 620 is whether to take FHA at the better rate-plus-MIP combo today or push for 680 (90-180 days away with active credit work) and switch to conventional with cheaper monthly PMI and the ability to drop PMI altogether at 80 percent LTV.
The LLPA Penalty at 620-639
Loan-Level Pricing Adjusters are credit-and-LTV-driven fees Fannie and Freddie charge upfront on every conventional loan. The 620-639 FICO band is the most expensive on the LLPA grid, because the agencies price the heightened default risk into the fee.
Approximate LLPAs at 620-639 FICO by loan-to-value (per Fannie Mae Selling Guide LLPA matrix, 2026):
| LTV | LLPA (points) | $ on $300K loan | Rate equivalent |
|---|---|---|---|
| >95% (3% down) | 3.500 pts | $10,500 | +0.88% |
| 90.01-95% (5% down) | 3.250 pts | $9,750 | +0.81% |
| 85.01-90% (10% down) | 2.625 pts | $7,875 | +0.66% |
| 80.01-85% (15% down) | 2.250 pts | $6,750 | +0.56% |
| ≤80% (20%+ down) | 1.625 pts | $4,875 | +0.41% |
LLPAs may be paid in cash at closing or rolled into the rate. Most lenders quote rates that already include the LLPA pass-through, so the borrower rarely sees the line item.
HomeReady and Home Possible waive the area-median LLPA and cap total LLPA at 1.500 points for borrowers at or below 80 percent of AMI, which makes them dramatically cheaper than standard conventional at 620.
FHA vs Conventional at 620: Side-by-Side
FHA at 620
- Rate: ~7.10% (vs PMMS 6.50%)
- Down payment: 3.5%
- UFMIP: 1.75% (financed)
- Annual MIP: 0.55%
- MIP duration: Life of loan (if <10% down)
- DTI ceiling: 50% with comp factors
- Loan limit (2026): $541,287 floor / $1.24M ceiling
Conventional at 620
- Rate: ~7.30% (LLPA-adjusted)
- Down payment: 3% (HomeReady) or 5%+ (standard)
- No upfront MIP
- Annual PMI: 1.10-1.40% (drops to 0.85% on HomeReady)
- PMI duration: To 78% LTV auto / 80% on request
- DTI ceiling: 45% (50% with strong AUS)
- Loan limit (2026): $832,750 floor / $1.25M HCOL
On a $250,000 loan at 620, the FHA payment is roughly $1,910 a month (P&I + MIP), conventional is roughly $2,005 (P&I + PMI). FHA wins by $95 a month today. But over a 10-year horizon, conventional wins on lifetime cost if you intend to drop PMI at 80 percent LTV through amortisation or a moderate equity gain. The conventional advantage gets stronger at 680 and dominant at 740.
Path to 680: Realistic Timelines
Moving from 620 to 680 is a 60-point lift, which is achievable in 90-180 days for most borrowers without derogatory marks. The fastest mover is utilisation. If you carry any revolving balance above 30 percent of its limit, paying down to under 10 percent reports within one statement cycle and typically lifts FICO 15-35 points. Combine across two cards and you can see 40-60 points in 30-60 days.
Second-fastest lift: removing late-payment disputes. A 30-day late from 24+ months ago hurts less than one from 12 months ago, but both still drag the score. A goodwill removal letter to the original creditor (asking for late payment forgiveness on an account otherwise in good standing) succeeds roughly 20 percent of the time. Worth trying.
The economic case: $300K loan at 620 conventional with 10 percent down quotes around 7.30 percent. The same loan at 680 conventional quotes around 6.75 percent. That is 0.55 percent off the rate, or $112 a month over 30 years ($40,320 lifetime). The 90-180 day wait to 680 returns roughly $40K in interest, plus the option to drop PMI sooner (because the rate cut speeds amortisation).
Frequently Asked Questions
What changes at 620 vs 619?
Everything in the conventional program opens up. Fannie Mae and Freddie Mac both set 620 as the absolute floor for traditional 30-year conventional financing. Below 620 you are FHA or USDA only. At 620 you can run a Desktop Underwriter (DU) Accept on conventional, qualify for HomeReady or Home Possible at 3 percent down, and price out PMI options. The single-point gap from 619 to 620 reshapes the entire program menu.
Is conventional or FHA cheaper at 620?
FHA is usually cheaper at exactly 620. FHA rates run roughly 0.40 to 0.60 percent below conventional at this tier (because conventional LLPAs add 1.625 to 2.000 points in fees, which the lender passes through as rate). FHA MIP at 0.55 percent annual is also lower than conventional PMI at 620, which prices around 1.10 to 1.40 percent annual. The crossover point where conventional wins is roughly 680.
What is an LLPA and how much does it cost at 620?
Loan-Level Pricing Adjusters are fees Fannie Mae and Freddie Mac charge based on credit score, LTV, occupancy, and property type. At 620-639 FICO with 90.01 percent LTV (10 percent down), the LLPA matrix charges 2.625 points. On a $300,000 loan that is $7,875 in fees, which the lender typically passes through as a rate bump (each point bumps the rate roughly 0.25 percent, so 2.625 points equals about 0.65 percent in rate). The full LLPA grid is on the Fannie Mae Selling Guide site.
Should I wait until 640 or 680 before applying?
Wait to 680 if you can do it within four to six months. The LLPA drop from 620-639 to 680-699 is roughly 1.375 points, which on a $300K loan is $4,125 saved in upfront cost or roughly 0.35 percent off the rate. That is $70-$80 a month for the life of the loan. Waiting to 640 is less compelling: the LLPA only drops 0.25 points, saving about $750 on a $300K loan.
Do I still pay PMI at 620 conventional?
Yes, on any loan above 80 percent loan-to-value. At 620 with 10 percent down, expect monthly PMI of $250-$315 on a $300K loan. PMI cancels automatically when the loan amortises to 78 percent LTV (around year 11 on a 30-year), or you can request cancellation at 80 percent LTV with a documented appraisal. FHA MIP, in contrast, stays for the life of the loan unless you put 10 percent down (in which case it drops off after 11 years).
Can I use HomeReady or Home Possible at 620?
Yes, both. Fannie Mae HomeReady and Freddie Mac Home Possible accept 620 minimum FICO at 3 percent down, with income at or below 80 percent of area median income (AMI). Both programs price PMI more cheaply than standard conventional (roughly 0.85 to 1.00 percent annual vs 1.25-1.40 percent), waive the area-median LLPA, and allow grants and gift funds for the full down payment. These are the right products for low-to-moderate income borrowers at the conventional credit floor.
What DTI ceiling applies at 620?
DU and LPA will typically approve up to 45 percent back-end DTI at 620 with two compensating factors (cash reserves and stable employment). Above 45 percent, the AUS engine almost always returns a Refer, kicking the file to manual underwriting (rare on conventional, more common on FHA at this tier). FHA at 620 still allows up to 50 percent back-end with compensating factors per Handbook 4000.1.