Conventional Loan with 640 Credit Score 2026 | 5% Down Guide
640 credit score = conventional loan APPROVED in 2026! Down payment: 5% ($10K on $200K). Interest rate: 6.95%-7.15%. PMI: $119/month (drops off at 78% LTV!). Monthly payment: $1,399 (P&I + PMI). Better than FHA long-term (no lifetime MIP). Requirements: Income $60K+, DTI <43%, no recent bankruptcy. Get pre-approved in 48 hours. Related: FHA vs Conventional comparison.
💎 Conventional Loan 640 Credit (Quick Facts):
Down Payment: 5% ($10K on $200K home)
Interest Rate: 6.95%-7.15% (Feb 2026)
PMI: $119/month (drops off at 78% LTV = 5-7 years!)
Monthly Payment: $1,399 (P&I + PMI on $200K)
Income Needed: $60K-$65K/year
Advantage: PMI cancels (FHA MIP is lifetime!)
⏰ Get pre-approved NOW! 640 credit = you qualify!
Conventional vs FHA (640 Credit Score)
| Feature | Conventional (640) | FHA (620-640) |
|---|---|---|
| Down Payment | 5% ($10K on $200K) | 3.5% ($7K) |
| Interest Rate | 6.95%-7.15% | 6.75%-7.00% |
| PMI/MIP | $119/month | $161/month |
| PMI Cancellation | 78% LTV (5-7 yrs) | LIFETIME |
| Monthly Payment | $1,399 | $1,431 |
| Loan Limits | $832,750 | $498,257 |
| Best For | Long-term (5+ years) | Short-term (<5 years) |
🎯 Get Conventional Loan Pre-Approval!
640 credit? Compare conventional lenders NOW!
Compare Lenders Free →Free quotes • No obligation • 48-hour approval
Real Example: $200K Home (Conventional vs FHA)
Conventional (5% Down)
Purchase Price: $200,000
Down Payment (5%): $10,000
Loan Amount: $190,000
Interest Rate: 7.05%
Monthly P&I: $1,280
PMI: $119/month
Total Payment: $1,399/month
PMI drops off Year 5-7 = save $119/month!
FHA (3.5% Down)
Purchase Price: $200,000
Down Payment (3.5%): $7,000
Loan Amount: $193,000
Interest Rate: 6.875%
Monthly P&I: $1,270
FHA MIP: $161/month
Total Payment: $1,431/month
MIP is LIFETIME (never drops off!)
💰 Long-Term Savings (Conventional vs FHA):
Year 1-5: FHA saves $32/month ($1,920 total)
Year 6-30: Conventional saves $161/month ($48,300 total!)
30-Year Total Savings: Conventional saves $46,380!
✅ Conventional = BETTER if staying 5+ years!
Requirements: Conventional Loan 640 Credit
✅ You WILL Qualify If:
- Credit Score: 640-660+ (640 minimum, 660+ for best rates)
- Down Payment: 5% saved ($10K on $200K home)
- Income: $60K-$65K/year (stable W-2 job, 2+ years)
- DTI Ratio: <43% (debt-to-income)
- Employment: 2+ years work history (same employer or field)
- Bankruptcy: 4+ years ago (conventional requirement)
- Foreclosure: 7+ years ago
- Reserves: 2 months mortgage payments in savings
❌ You WON'T Qualify If:
- Credit Score <640: Use FHA instead (620 minimum)
- Recent Bankruptcy: <4 years ago (FHA only 2 years)
- High DTI: >50% debt-to-income
- No Down Payment: <5% saved (need $10K on $200K)
- Self-Employed <2 Years: Need 2 years tax returns
- Collections: Unpaid collections >$5K
⏰ Ready for Conventional Loan?
640 credit + 5% down = Get pre-approved NOW!
Get Pre-Approved Free →Free application • No obligation • 48-hour approval
When to Choose Conventional vs FHA
Choose CONVENTIONAL If:
- Credit 640+: You qualify for conventional rates
- 5% Down Saved: You have $10K-$15K down payment
- Staying 5+ Years: PMI drops off = huge long-term savings
- Higher Loan Amount: Need >$498K (FHA limit)
- Lower Monthly Payment: $1,399 vs $1,431 FHA
💡 Conventional saves $46K over 30 years vs FHA!
Choose FHA If:
- Credit 620-639: Don't qualify for conventional
- 3.5% Down Only: Only have $7K saved (vs $10K conventional)
- Staying <5 Years: Won't benefit from PMI cancellation
- Recent Bankruptcy: 2-3 years ago (conventional needs 4+)
- Gift Funds: FHA allows 100% gift down payment
💡 FHA = easier to qualify, lower down payment!
Step-by-Step: Get Conventional Loan
Step 1: Check Credit Score (640+ Required)
Get free credit report. Verify 640+ score. Dispute errors. Pay down credit cards to <30% utilization.
Step 2: Save 5% Down Payment ($10K on $200K)
Save $10K-$15K for down payment. Cut expenses, side hustle, sell stuff. Gift funds OK (must be documented).
Step 3: Get Pre-Approved (48 hours)
Apply with 3-5 conventional lenders. Provide: Tax returns (2 years), pay stubs (2 months), bank statements (2 months). Get pre-approval letter.
Step 4: House Hunt ($150K-$250K Range)
Work with realtor. Target homes in your budget. Make offers. Get accepted.
Step 5: Close in 30-45 Days 🎉
Inspection, appraisal, underwriting. Bring $10K down + $3K-$8K closing costs. Sign papers. Get keys!