Conventional loans for move-up and repeat buyers: what conforming underwriting expects

You have bought before, so the process feels familiar — but conforming pricing, the sale of your current home and the loss of first-time buyer waivers change the math this time around.

A conventional loan is any mortgage not insured by the federal government. When it also fits Fannie Mae or Freddie Mac eligibility rules it is “conforming,” and that is the loan most repeat and move-up buyers end up with. The mechanics are mature and fast, but the pricing and the documentation are stricter than a first-time buyer remembers.

Who this profile covers

Households buying their second, third or fourth home; owners trading up to a larger house or a better school district; people relocating for work who must sell and buy within weeks; and owners who keep the old house as a rental. What unites them is that they generally do not qualify as first-time buyers under the Fannie Mae and Freddie Mac definition (no ownership interest in a principal residence during the prior three years), which removes some of the cheapest pricing and the 3%-down standard option. Credit and equity are usually stronger than a first-timer’s, and that is exactly what conforming underwriting rewards.

The loan programs that fit, and why

Standard conforming fixed-rate loans (30-, 20- and 15-year) remain the workhorse. The loan amount must stay at or below the county limit published by the FHFA each November; the baseline for 2025 was $806,500 for a one-unit home, and the FHFA raised it again for 2026 — confirm the current figure for your county on the FHFA site, because designated high-cost counties run up to 150% of baseline (“high-balance” conforming loans with their own price adjustments). Anything above the local limit is a jumbo loan with different rules.

Down payment: the standard conforming minimum for a repeat buyer is 5% on a one-unit primary residence. The 3% option (Fannie Mae’s standard 97% LTV) generally requires at least one borrower to be a first-time buyer, while HomeReady and Home Possible allow 3% for any buyer whose income is at or below 80% of the area median. Second homes typically need 10% down; investment properties 15% to 25%.

ARMs (5/6, 7/6 and 10/6, indexed to SOFR) can make sense for a move-up buyer who expects another move within the fixed period. Renovation loans (Fannie Mae HomeStyle, Freddie Mac CHOICERenovation) finance the purchase and the work in one conforming loan, which avoids a hard-money bridge for a fixer.

How underwriting treats you

Nearly every conforming loan is decided by an automated underwriting system: Fannie Mae’s Desktop Underwriter (DU) or Freddie Mac’s Loan Product Advisor (LPA). The system returns an “Approve/Eligible” or “Accept” recommendation with the documents it wants. A few things differ from your last purchase:

• Credit. The minimum score is 620. Pricing is set by loan-level price adjustments (LLPAs), a grid crossing credit score and loan-to-value ratio; the difference between a 680 and a 760 score can be several tenths of a percent in rate on an 80% LTV loan. Fannie Mae’s DU now uses the average of all borrowers’ median scores rather than the lowest, which helps when one spouse has thinner credit.
• Debt-to-income. DU and LPA allow a back-end ratio up to 45%, and up to 50% when reserves and credit are strong. The number that surprises move-up buyers is the payment on the house they are leaving: unless it is sold, or under contract with financing contingencies cleared, its full PITIA stays in the ratio. Rental income from a departing residence may offset it, typically at 75% of a signed lease, with the deposit documented.
• Assets. Two months of statements; large deposits must be sourced; proceeds from the sale of the old home are documented by the settlement statement. Reserves of two to six months are often requested on second homes, investment properties and high-DTI files.
• Occupancy. A primary residence must be occupied within 60 days of closing and you sign an affidavit saying so. Claiming “primary” on what is really a rental to get better pricing is mortgage fraud, and it is the most common abuse in this segment.
• Appraisal. DU and LPA may offer an appraisal waiver (“value acceptance” at Fannie Mae, “ACE” at Freddie Mac) on lower-LTV purchases and many refinances. It saves $500 or more and a week of time, but it means no one independently inspects the house for you.
• Mortgage insurance. Below 20% down you pay PMI, priced by score and LTV; it can be cancelled under the Homeowners Protection Act as equity builds, unlike FHA insurance.

Typical pitfalls for repeat buyers

Buying before selling without understanding how both payments count. Accepting a seller-paid temporary buydown without checking that the concession fits the interested-party limits for your LTV. Assuming the appraisal waiver protects you against overpaying. Keeping a home-equity line open on the old house that still shows as a debt. And, more quietly, accepting a lender credit on the Loan Estimate that shrinks by closing — a change the TRID tolerance rules usually prohibit.

What to ask a lender before you apply

1. Which AUS will you run, and what LLPAs apply to my score and LTV?
2. Will my current home’s payment be counted, and what would it take to exclude it?
3. Is an appraisal waiver likely, and can I decline it?
4. What is the PMI rate, and is lender-paid or single-premium PMI cheaper over my expected holding period?
5. Are you the servicer after closing, or will the loan be transferred?

The conventional loan hub goes deeper on each program; the requirements guide lists the documents to gather. This is general information and not legal or financial advice; eligibility is decided by the lender and the AUS, never by a website.

What matters most

• Repeat buyers generally need 5% down on a standard conforming loan; 3% requires HomeReady or Home Possible income limits, or a first-time buyer on the application.
• Pricing is driven by LLPAs crossing credit score and LTV — a 40-point score gain or 5% more down can lower the rate more than shopping three lenders.
• The payment on the home you are leaving stays in your DTI until it is sold or under a contract with financing contingencies cleared; lease income may offset 75%.
• DU and LPA allow DTI up to 45%, and 50% with strong reserves and credit, but that is an approval ceiling, not a budget.
• An appraisal waiver speeds closing but removes the only independent look at the property; you may decline it.
• PMI on a conventional loan is cancellable at 80% LTV on request and ends automatically at 78% — build the request date into your plan.
• The 2026 FHFA conforming limit varies by county; above it you are in jumbo territory with different reserves and documentation.

Federal rules, read for conventional loan borrowers

• TILA for conventional borrowers: second homes, rentals and the refinance rescission window
• RESPA when you buy again: servicing transfers, escrow cushions and affiliated title
• TRID tolerances on a conforming purchase: lender credits, rate locks and the 10% bucket
• ECOA and your appraisal: the valuation copy a conventional borrower is owed before closing
• Fair Housing Act for move-up buyers: appraisal bias, reconsideration of value, HOA rules
• HMDA on a conforming loan: the demographic questions, rate spread and what goes public
• Registered or licensed? Checking the NMLS ID on a conventional loan officer
• QM pricing test on a conventional loan: how LLPAs push a 620 score toward the APOR line
• Why a conforming loan almost never trips HOEPA — and the HPML line it can cross
• PMI cancellation on a conforming loan: 80% request, 78% automatic and the midpoint rule
• Servicing rules after a move-up purchase: old-loan payoff, statements, early intervention
• FCRA for conventional borrowers: tri-merge pulls, trigger leads and your score notice
• Flood insurance on a conforming loan: SFHA determinations, escrow and the 30-day waiver
• MARS rule for homeowners with equity: “PMI removal” and “loan audit” pitches after closing
• SCRA with a military co-borrower: why a new conventional loan rarely gets the 6% cap
• LO compensation on a conforming loan: buydowns, discount points and anti-steering options

Frequently asked questions

Can a repeat buyer put 3% down on a conventional loan?

Sometimes. The standard 97% LTV program from Fannie Mae generally requires at least one first-time buyer on the loan. A repeat buyer can still reach 3% down through HomeReady or Home Possible if household income is at or below 80% of the area median income for the property’s location. Otherwise the conforming minimum for a primary residence is 5%, and 10% for a second home.

Does the mortgage on my current house count against me if it is for sale?

Generally yes, until it closes. DU and LPA count the full housing payment on the departing residence unless the lender documents an executed sales contract with financing contingencies cleared, or a signed lease that allows a portion of rent to offset the payment. Many move-up buyers solve this with a sale contingency, a bridge loan or by closing the sale first.

What credit score do I need for a conforming loan in 2026?

The floor is 620, but the cost of the loan depends on where you fall on the LLPA grid. Above roughly 740 the adjustments are small; between 620 and 680 they are significant, and PMI also costs more. Fannie Mae now averages the median scores of all borrowers for eligibility, and since 2025 the GSEs also accept VantageScore 4.0 — ask which model your lender uses.

Is an appraisal waiver a good idea on a move-up purchase?

It saves time and money and is usually offered when the AUS trusts its own valuation data at lower LTVs. The trade-off is that nobody walks through the house on your behalf. Buyers who waive the appraisal often keep an inspection contingency and check recent comparable sales themselves. You can ask the lender to order a full appraisal anyway.

Related guides: Conventional loan requirements: credit, down payment, DTI, reserves, property · Conforming loan limits: how the FHFA number works and what happens above it · PMI removal: the 80% request, the 78% automatic cancellation, and the appraisal route · Mortgage points and rate buydowns: when paying for a lower rate pays off · Debt-to-income ratio limits by loan type — and how to lower yours.