Conventional Loan
Conventional Loan Guide for First-Time Buyers in Oregon
Reviewed by the HomeMath editorial team Updated 2026-08-06
Key takeaways
- Minimum credit score: around 620 for most conventional loans
- Down payment: as low as 3% with PMI; 20% down avoids PMI
- Typical debt‑to‑income limit: 43% or lower
- Conforming loan limit: follows FHFA limits; most of Oregon uses the baseline limit, higher limits apply in high‑cost counties like Multnomah
- PMI can be cancelled once you reach 20% equity (often automatic at 22%)
- Oregon first‑time‑buyer programs can provide down‑payment assistance and favorable terms
Conventional Loan Basics
A conventional loan is a mortgage that is not insured or guaranteed by the federal government. Lenders evaluate your credit, income, and assets to decide if you qualify. Because the loan is privately underwritten, the criteria are often stricter than government‑backed options.
Key Qualification Factors
- Credit score: Most lenders look for a score of about 620 or higher. A higher score can secure a better interest rate.
- Down payment: You can put down as little as 3% of the purchase price, but you’ll need to pay private mortgage insurance (PMI) until you own at least 20% equity.
- Debt‑to‑income (DTI) ratio: Lenders typically cap your DTI at 43%, meaning your monthly debt payments—including the new mortgage—should not exceed 43% of your gross monthly income.
- Loan limits: Conventional loans must stay within the Federal Housing Finance Agency (FHFA) conforming loan limits. In most of Oregon the baseline limit applies, while high‑cost counties such as Multnomah have higher limits.
Private Mortgage Insurance (PMI)
If your down payment is less than 20%, the lender will require PMI to protect against default. PMI is usually a small percentage of the loan balance added to your monthly payment. Once you reach 20% equity, you can request cancellation; many lenders automatically terminate PMI when you hit 22% equity.
Oregon‑Specific Considerations
- Closings are commonly handled by title companies or escrow agents; an attorney is not required but can be hired for additional review.
- The Oregon Housing and Community Services (OHCS) program offers down‑payment assistance and special loan products for qualified first‑time buyers, which can be combined with a conventional loan to reduce out‑of‑pocket costs.
This article provides general information and is not personalized financial advice.
FAQ
Can I get a conventional loan if I have student loan debt?
Yes, as long as your overall debt‑to‑income ratio stays below the lender’s limit (usually 43%). Student loan payments are counted in the DTI calculation, so you may need a larger down payment or higher income to qualify.
What’s the main difference between a conventional loan and an FHA loan?
Conventional loans are privately underwritten and typically require a higher credit score and a larger down payment, but they avoid mortgage insurance premiums that FHA loans charge for the life of the loan. FHA loans are government‑backed, allow lower credit scores and down payments, but require an upfront and annual mortgage insurance premium.
How does private mortgage insurance (PMI) work?
PMI protects the lender if you default when you have less than 20% equity. It is paid monthly, annually, or as a lump‑sum at closing. You can request cancellation once you reach 20% equity, and most lenders automatically end PMI when you achieve 22% equity.
Do I need a real‑estate attorney for a home purchase in Oregon?
Oregon does not require an attorney for closings; most transactions are completed through title companies or escrow agents. However, you may choose to hire an attorney for additional legal review, especially if the deal involves complex issues.
What steps should I follow to apply for a conventional loan?
Start by checking your credit and gathering financial documents (pay stubs, tax returns, bank statements). Get pre‑approved from a lender to know how much you can borrow, then make an offer on a home. After the offer is accepted, the lender will order an appraisal, verify your information, and finalize the loan for closing.
Estimate your monthly payment →