The Basics
Credit Score Is the Biggest Pricing Lever
On government-backed loans like FHA, your credit score mostly determines whether you qualify. On conventional loans, your score goes further — it determines both eligibility and how much extra you pay through a system called Loan-Level Price Adjustments (LLPAs). Two borrowers with identical loan amounts can receive rates that differ by half a percent or more based entirely on their FICO scores.
Fannie Mae and Freddie Mac publish LLPA matrices that lenders use to price every conventional mortgage. The adjustments are based on two variables: your credit score and your loan-to-value ratio. Understanding this grid gives you real negotiating power because you'll know exactly what a score improvement is worth in dollars. If you're still exploring conventional basics, start with the full requirements guide.
620
Minimum conventional score
0.25%
Typical LLPA at 740–759
1.75%
LLPA at 620–639 / 95% LTV
Pricing Matrix
LLPA Grid: Credit Score vs. Loan-to-Value
LLPAs are expressed as a percentage of your loan amount. A 0.50% adjustment on a $300,000 loan adds $1,500 in upfront cost — or roughly 0.125% to your interest rate if absorbed into the rate instead of paid as points. The table below shows representative Fannie Mae LLPA adjustments for purchase transactions.
Credit Score≤60% LTV60.01–75%75.01–80%80.01–95%
760+
0.000%
0.000%
0.125%
0.250%
740–759
0.000%
0.250%
0.250%
0.500%
720–739
0.125%
0.250%
0.500%
0.750%
700–719
0.250%
0.500%
0.750%
1.000%
680–699
0.375%
0.500%
0.875%
1.250%
660–679
0.500%
0.750%
1.375%
1.500%
640–659
0.625%
1.000%
1.500%
1.750%
620–639
0.750%
1.250%
1.625%
1.750%
💡
How to read this grid
Find your credit score on the left, then your anticipated LTV across the top. The intersection is the fee percentage applied to your loan amount. At 720 with 90% LTV, you'd face a 0.750% adjustment — that's $2,250 on a $300,000 loan. Putting more money down (reducing LTV) shifts you left, and raising your score shifts you up. Both moves save real money. See how down payment affects your tier →
Score Bands
Conventional Credit Score Tiers Explained
Not all credit scores are treated equally. Conventional lending breaks FICO scores into distinct tiers, and the difference between landing at the top versus bottom of a tier can mean thousands of dollars over your loan's life. Here is how each range is treated by Fannie Mae and Freddie Mac underwriting engines.
Top Tier: 760 and Above
✓
Lowest possible LLPAsZero or near-zero adjustments at most LTV levels. This is the pricing baseline that all other tiers are measured against.
✓
Best PMI rates
Private mortgage insurance premiums drop substantially above 760 — often 0.20% to 0.30% of loan amount annually. See PMI cost breakdown →✓
Maximum program flexibilityEvery conventional product is available. No compensating factors needed for DTI or reserves.
Strong: 720–759
✓
Modest LLPAsAdjustments in this band typically range from 0.25% to 0.50% depending on LTV. Still competitive pricing overall.
✓
Full product accessAll conventional programs available without restriction. Manual underwriting rarely needed.
!
Worth the push to 760If you're at 745, a 15-point improvement could save $2,000–$4,000 on a typical purchase loan.
Moderate: 680–719
!
Noticeable LLPA impactAdjustments climb to 0.50%–1.00%. On a $350,000 loan, that could mean $1,750–$3,500 in added cost.
!
Higher PMI premiumsMonthly PMI at this tier is roughly double what a 760+ borrower pays for the same loan amount and LTV.
✓
Still solidly conventional territoryMost programs still accessible. DTI limits may tighten depending on the automated underwriting response.
Below 680: The Crossover Zone
✗
660–679: Heavy LLPAsAdjustments of 1.00% to 1.50% at common LTV levels. Conventional gets expensive quickly at this band.
✗
640–659: FHA often winsThe combined cost of higher rate, higher PMI, and LLPA fees usually makes FHA a better overall deal.
✗
620–639: Conventional floor
Maximum LLPA hits apply. PMI rates are highest. Seriously compare conventional vs FHA at this level.
Strategy
Why 760 Is the Sweet Spot for Conventional
Above 760, the LLPA grid essentially flatlines. Whether you carry a 780 or an 820, Fannie Mae and Freddie Mac treat them identically for pricing purposes. The entire system of rate adjustments rewards getting to 760 and barely rewards going higher. This makes 760 the most cost-efficient target for anyone shopping a conventional mortgage.
The jump from 740 to 760 can save more on a 30-year mortgage than the jump from 660 to 700 — because the LLPA curve steepens dramatically in the lower tiers. If you're sitting at 745, even a small credit optimization before applying could shift your pricing tier and reduce your cost of borrowing for the entire life of the loan.
✅
Practical example on a $350,000 purchase
At 760+ with 80% LTV, the LLPA is roughly 0.125% — about $438 in upfront cost. At 700 with the same LTV, it jumps to 0.750% — or $2,625. That's a $2,187 difference from the credit score alone. And that doesn't include the additional savings on PMI rates, which also improve at higher score tiers. Total lifetime savings from reaching 760 versus 700 can easily exceed $15,000 over 30 years.
Keep in mind that conventional uses the lower middle score between co-borrowers. If you're at 780 and your co-borrower is at 690, the loan prices off 690. In some cases it makes financial sense to leave the lower-scoring borrower off the application — as long as the primary borrower's income alone supports the debt-to-income ratio. Bayou Mortgage can run both scenarios for you.
Comparison
When FHA Beats Conventional (Sub-660 Scores)
FHA loans don't use LLPAs at all. The mortgage insurance premium is the same whether your score is 580 or 780. That fixed-cost structure gives FHA a significant advantage for borrowers whose credit scores fall below the conventional sweet spot — particularly under 660 where conventional LLPA adjustments stack up fast.
FHA Advantages Below 660
✓
No score-based rate adjustmentsFHA MIP is flat — 0.55% annual for most loans. Doesn't change based on credit score.
✓
Lower minimum score (580)Conventional requires 620. If you're between 580–619, FHA is your only conforming option.
Conventional Advantages Above 720
✓
PMI cancels at 20% equityFHA MIP stays for the life of the loan on most terms. This is conventional's single biggest long-term advantage.
✓
Lower total insurance costAbove 720, conventional PMI is typically cheaper than FHA MIP — and it goes away eventually.
✓
Investment and second home eligibleFHA is primary residence only. Conventional allows investment properties and vacation homes.
⚠️
The 660 decision point
At 660, a conventional loan with 5% down faces roughly 1.375% in LLPAs plus elevated PMI. An FHA loan at 660 has zero score-based adjustments and a flat 0.55% annual MIP. Depending on the loan amount and expected appreciation, FHA often delivers a lower total monthly cost and lower upfront fees at this crossover point. Ask Bayou Mortgage to run both scenarios side by side — the right answer depends on your specific numbers.
Optimization
Strategies to Improve Your Score Before Applying
Because conventional pricing is so sensitive to credit tiers, even a 20-point improvement can produce meaningful savings. The following strategies target the factors that move your score fastest — and they're especially effective if you're within striking distance of the next LLPA tier.
Quick Wins (30–60 Days)
✓
Pay revolving balances below 10% utilizationCredit utilization is roughly 30% of your FICO score. Going from 50% to under 10% can boost scores 30–50 points.
✓
Request credit limit increasesHigher limits reduce your utilization percentage even without paying balances down. Don't open new accounts.
✓
Dispute genuine errorsIncorrect late payments, wrong balances, or accounts that aren't yours. Dispute through each bureau directly.
Avoid Before Applying
✗
Opening new credit accountsNew inquiries and reduced average age of accounts both lower scores temporarily.
✗
Closing old accountsReduces your total available credit and average age — both negative for FICO scoring.
✗
Making large purchases on creditIncreasing balances before your credit pull will raise utilization and hurt your score at exactly the wrong time.
Bayou Mortgage offers a credit review as part of every pre-approval. We'll identify which tier you fall into, calculate what the next tier would save, and help you decide whether it's worth waiting to improve your score or applying now with your current profile.
Know Your Score Tier Before You Shop
Bayou Mortgage runs a full tri-merge credit pull and shows you exactly where you land on the LLPA grid — no guessing from free score apps.
Common Questions
Conventional Credit Score FAQ
Answers specific to how credit scores affect conventional mortgage pricing and eligibility.
Which credit score model do conventional lenders use? +
Conventional lenders pull FICO scores from all three bureaus — Equifax, Experian, and TransUnion — and use the middle score. For joint applications, the lower of the two borrowers' middle scores is the qualifying score. This is different from VantageScore models used by Credit Karma and similar free tools, which is why your lender-pulled score may differ from what you see online.
What's the minimum credit score for a conventional loan? +
The absolute floor is 620 for most conventional programs. Some lenders add overlays requiring 640 or even 660 — those aren't Fannie Mae or Freddie Mac rules, they're individual lender risk policies. Bayou Mortgage works to the actual guidelines, not arbitrary internal thresholds. Below 620, you'll need to look at
FHA or other government-backed programs.
How much does a 20-point credit score increase actually save? +
It depends on where you start. Going from 740 to 760 at 80% LTV saves roughly 0.125% in LLPAs — about $375 on a $300,000 loan. Going from 660 to 680 at the same LTV saves about 0.500% — or $1,500. The lower your starting point, the more each incremental improvement is worth. Factor in reduced PMI costs and the total savings multiply further over the loan's lifetime.
Does my co-borrower's credit score affect my rate? +
Absolutely. Conventional loans use the lower of the two middle scores for pricing. If you're at 780 and your co-borrower is at 660, the entire loan prices off 660 — meaning significantly higher LLPAs and PMI. In some cases, leaving the lower-scoring borrower off the application produces a better financial outcome, provided the remaining borrower's income supports the loan alone.
Are LLPAs paid upfront or rolled into the rate? +
Either option is available. LLPAs can be paid as discount points at closing, or they can be absorbed into a higher interest rate. Most borrowers choose the rate absorption because it avoids upfront cash outlay, but paying points upfront sometimes makes sense if you plan to hold the loan long-term. Bayou Mortgage will show you both scenarios and the break-even timeline.
Can I get a conventional loan with a credit score under 660? +
Technically yes — conventional allows down to 620. But below 660, the LLPA adjustments and PMI premiums become steep enough that FHA typically offers a lower total monthly payment for the same purchase price. It's worth running both scenarios.
See our conventional vs FHA comparison →How long does it take to improve my score enough to change tiers? +
The fastest lever is credit utilization — paying revolving balances below 10% of their limits can produce a 20–40 point jump within one to two billing cycles. Disputing errors can move quickly too, typically 30–45 days. Building payment history or recovering from derogatory marks takes longer. Bayou Mortgage can review your credit report and estimate a realistic timeline for reaching your target tier.
Find Out Your Exact Pricing Tier
Bayou Mortgage pulls your real FICO scores and shows you the actual LLPA impact — not an estimate from a free app.
