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Conventional loans — mortgages that are not insured by the federal government — are the most popular type of mortgage and offer affordability to homebuyers.

Private mortgage lenders originate and fund conventional loans, which are then often bought by Fannie Mae and Freddie Mac, publicly traded companies that are run under a congressional charter.

By buying and selling conventional conforming mortgages, Fannie and Freddie help to ensure a reliable flow of mortgage funding.

Requirements for Conventional Loans

It can be confusing to know how to qualify for a mortgage.

Just realize, for one thing, that a higher credit score is usually required for a conventional loan than an FHA loan, popular among first-time buyers.

Here are factors a lender will consider when sizing you up for a conventional loan.

Your Credit Score

You’ll usually need a FICO® credit score of at least 620 for a fixed-rate or adjustable-rate mortgage.

The FICO score range of 300 to 850 is carved into these categories:

•   Exceptional: 800 to 850

•   Very Good: 740 to 799

•   Good: 670 to 739

•   Fair: 580 to 669

•   Poor: 300 to 579

In general, the higher your credit score, the better the interest rates you’re offered.

Down Payment

Putting 20% down is desirable because it means you can avoid paying PMI, or private mortgage insurance, which covers the lender in case of loan default.

But many buyers don’t put 20% down. The median down payment on a home is 13%, according to a recent study by the National Association of Realtors®.

Conventional loans require as little as 3% down, and the down payment can be funded by a gift from a close relative; a spouse, fiancé or domestic partner; a buyer’s employer or church; or a nonprofit or public agency. The gift may require a gift letter for the mortgage.

Just keep in mind that the smaller the down payment, the higher your monthly payments are likely to be, and PMI may come along for the ride until you reach 20% equity.

Debt-to-Income Ratio

Your debt-to-income ratio (DTI) helps a lender understand your ongoing monthly debt obligations relative to your gross monthly income.

To calculate back-end DTI:

1.    Add up your monthly bills (but do not include groceries, utilities, cellphone bill, car insurance, and health insurance).

2.    Divide the total by your pretax monthly income.

3.    Multiply by 100 to convert the number to a percentage.

In general, lenders like to see a DTI ratio of 36% but will accept 43%.

The Fannie Mae HomeReady® loan, for lower-income borrowers, may allow a DTI ratio of up to 50%.

In any case, the lower your DTI ratio, the more likely you are to qualify for a mortgage and possibly better terms.

Loan-to-Value Ratio

The loan-to-value ratio (LTV) is the amount of the mortgage you are applying for compared with the home value. The higher the down payment, the lower the LTV ratio.

Fannie Mae typically sets LTV limits at 97% for a fixed-rate mortgage for a principal residence (think: 3% down) and 85% for a fixed or adjustable loan for a one-unit investment property.

When LTV exceeds 80% on a conforming loan, PMI will likely apply, although some borrowers employ a piggyback loan to avoid mortgage insurance.

Conventional Conforming Loan Limits

Many loans are both conventional and conforming — meaning they meet the guidelines of secondary mortgage market powerhouses Fannie Mae and Freddie Mac, which buy such mortgages and often package them into securities for investors.

Conventional conforming loans fall below limits set by the Federal Housing Finance Agency (FHFA) every year.
Staying under a conforming loan limit often equates to a lower-cost mortgage because the loan can be acquired by Fannie and Freddie.

The conforming loan limits for 2022 in many counties in the contiguous states, Washington, D.C., and Puerto Rico rose with market prices:

•   One unit: $647,200

•   Two units: $828,700

•   Three units: $1,001,650

•   Four units: $1,244,850

In high-cost areas like Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the 2022 conforming loan limits were:

•   One unit: $970,800

•   Two units: $1,243,050

•   Three units: $1,502,475

•   Four units: $1,867,275

Nonconforming Loans

Word games, anyone? Nonconforming loans are simply mortgages that do not meet Fannie and Freddie standards for purchase. They usually take the form of jumbo loans and government-backed loans.

A homebuyer or refinancer who needs a mortgage beyond the FHFA limits can seek a jumbo mortgage loan. A jumbo loan is still a conventional loan if it’s not backed by a government agency; it’s just considered a “nonconforming” loan.

FHA, VA, and USDA mortgages — those backed by the Federal Housing Administration, Department of Veterans Affairs, and the U.S. Department of Agriculture — are also nonconforming loans.

Nonconforming mortgage rates may be higher because the loans carry greater risk for lenders, but at times the rates might skew lower than conventional conforming rates.

The Takeaway

Conventional loan requirements are good to know when you’re looking at the most popular type of mortgage around. Then again, a jumbo loan may sound pretty good.

SoFi offers both, each with special features. Check out the advantages of SoFi mortgage loans. And then, within minutes…

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Editor's Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.

Your marriage status can affect your financial life in unexpected ways, and student loans are no exception. If you have an income-driven repayment plan, your spouse’s income might change your monthly payment calculation. But such challenges also present opportunities. For instance, you may be able to rejigger your student loan payments to save money on interest, lower your monthly payment, or shorten your repayment term so you can become debt-free faster.

Here we’ll show you how getting married affects student loans. Learn strategies for restructuring your debts, and tips for saving money that you can put toward other goals.

Marriage and Student Loan Repayments

Your marital status can affect everything from loan payments to tax breaks. Understanding how marriage impacts student loans (yours or your partner’s) can help you craft a new repayment plan and get ahead of your other financial goals. That way, you can focus on more urgent matters, like who’s making dinner tonight.

How Marriage and Student Loans Can Affect Your Taxes

If you paid student loan interest in the previous tax year, you may qualify for a student loan deduction. But your eligibility can change depending on if you are filing jointly or separately.

According to the IRS, as of the 2021 tax year, a single person (or head of household) with a modified adjusted gross income (MAGI) under $85,000 may be able to deduct up to $2,500 of qualified student loan interest paid in a given year. (Eligible MAGI for married filing jointly for this deduction is under $170,000.)

However, if you’re married but filing separately, that student loan interest deduction goes away. You can only take advantage if you file jointly. (See below for other deductions you may not qualify for if filing separately.)

Helping Each Other with Repayments

If you want to help your spouse with their student loan repayment, whether they have private or federal loans, you can. When one spouse takes out a loan before the marriage, typically that loan still belongs to the original borrower. However, you can choose to put both your names on the loan, and be equally responsible for the debt, by refinancing together.

Refinancing student loans gets you a brand-new loan in both your names. At the same time, you may be able to qualify for a lower interest rate or better terms. However, you will forfeit your federal student loan benefits if you refinance federal loans with a private lender.

Marriage Could Complicate Your Income-Driven Repayment Plan

When you’re married and filing separately (vs. jointly), student loan servicers count only your individual income. But if you file jointly and you or your spouse is enrolled in the Revised Pay As You Earn (REPAYE) plan — one of four income-driven repayment plans — you could see your monthly payments increase. When filing your taxes jointly, your combined AGI replaces your individual income in REPAYE’s calculations.

For the three other income-driven repayment plans — Pay As You Earn (PAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR) — you can potentially avoid higher payments by filing separately. However, when you do this you lose the ability to use the student loan interest deduction.

Filing separately also means you’ll no longer be able to qualify for the Earned Income Tax Credit, the American Opportunity Credit, and Lifetime Learning Credit. There is no one blanket answer for every married couple. Given the complexity of tax law, you’ll want to consult a tax professional to determine which option is best for you both.

Tips for Tackling Student Loan Debt Together

So what’s the best strategy for paying down student loans without letting them come between you and your spouse? Here are five tips to a debt-free happily ever after.

Tip #1: Create Your Big Financial Picture

Preparing to take on a big financial goal usually requires some conversation and preparation upfront. Before making any decisions, sit down and talk about your short- and long-term financial objectives, and make sure you’re both on the same page (or as close to it as possible). This can be an overwhelming topic, so see if you can break it down into chunks.

Have you established a household budget? How do student loans — and paying them off — fit into your long-term and short-term goals? Should you start aggressively paying off debt, or might it be better for you to ramp up over time? What other factors (e.g., buying a home, changing careers, having children) might influence your decisions?

Not only can this exercise give you more clarity to create an action plan, it can also be kind of fun. After all, planning a life together is part of the reason you got married in the first place. The key is to listen to each other.

Tip #2: Take Advantage of Technology

Once you’re clear on the big picture, it’s time to get into the weeds. Many people have more than one student loan, often with multiple lenders, so a good place to start is to gather all of your loan information together. You can use an online student loan management tool (try https://studentaid.gov/loan-simulator/) to compare repayment options and analyze prepayment strategies.

After crunching the numbers, your debt payoff strategy may include putting extra money toward your loans each month, which means creating and sticking to a budget that supports that goal.

Using a debt payoff planner can help you keep track of your debt payments, maintain spending within a budget, and show how close you are to paying off your debt in full. Tracking your spending may not feel good at first, but over time, this kind of discipline can help you see where your money goes and make conscious choices about your spending. Once you have your budget in place, these apps can be set up to alert you both when spending is getting off track.

Tip #3: Define the Who, What, When

Whether your finances are separate or combined, you’ll probably want to come to an agreement on how to collectively pay all of your financial obligations. Many couples address this based on each person’s share of the total household income.

For example, if one person contributes 40% of the household income, and the other 60%, the former might pay 40% of the shared bills and the latter 60%. Others find it simpler and more cohesive to have one household checking account and pay all bills from there. Or you can combine the two tactics, and have each spouse contribute a prorated amount to the joint bank account.

However you decide to split things up, consider setting up automatic payments for all household bills, because missed student loan payments can potentially impact both spouses’ credit. And a weak credit rating can make your future financial objectives tougher to achieve.

Tip #4: Look For Opportunities to Optimize

So now you’ve established a plan and a budget, and you know who’s on point for each bill. You’re on the path to getting student loan debt off your plate. Is there anything else you can do to speed up the process?

Short of winning the lottery, the most common ways to accelerate student loan payoff are prepayment (meaning, paying more than the minimum) or lowering the interest rate, the latter of which is most commonly accomplished through refinancing.

If you qualify to refinance your student loans, you’ll have to decide on your primary goal:

•   Lower your monthly payment by choosing a longer term. This frees up money in your budget, but you’ll potentially pay more in interest over the long term.

•   Lower your interest rate. This saves you money in interest over the long term. (It can also lower your monthly payment, but don’t count on it.)

•   Shorten the repayment period. This can save you money on interest over the life of the loan, and get you debt-free faster.

Tip #5: Be on the Same Team

Living with debt is stressful for any couple. But being in a committed relationship has its advantages. There’s a reason that weight loss experts often recommend finding a “buddy” to help cheer you on and keep you honest on your diet and exercise journey. The same applies to achieving a big financial goal like paying off student loan debt.

Keep it positive and the lines of communication open, and you may find that the journey to being debt-free makes your marriage stronger.

Refinancing Student Loans Separately vs. Jointly

If you and your new spouse decide you want to do more things with your money — have a child, buy a home, or invest more in retirement savings — it may be time to refinance student loans. Once again, you’ll need to run some numbers and decide whether to refinance your student loans together or separately.

When you apply to refinance your student loans, lenders typically evaluate your credit score and financial fitness. This determines your new interest rate and loan terms. The goal is for the new loan to be a better deal than your existing loans.

With a lower interest rate, you can reduce the amount of money you spend over the life of the loan. And with only one monthly student loan payment to worry about, your finances can be easier to manage.

But are you better off going it alone or together?

Refinancing Student Loans Separately

When you’re married, refinancing your student loans separately has pros and cons.

Advantages of refinancing separately	Disadvantages of refinancing separately
You’re not responsible for anyone’s debts but your own.	Financial responsibility may not be equitably distributed.
You can choose the loan you want, without compromise.	If you hit a financial rough spot, you alone are on the hook for payments.
Your own credit score and history determine your interest rate and loan terms.	If your credit score is weak, you’ll pay a higher interest rate.

Even if you’re married, refinancing student loans separately may be right for you if any of the following statements are true:

•   Your credit score and history are much stronger than your spouse’s, and you want to qualify for the lowest interest rate possible.

•   You and your spouse have different goals for refinancing — for instance, a lower monthly payment vs. saving money in interest.

•   Your spouse hopes to qualify for Public Service Loan Forgiveness (PSLF).

•   Your spouse is enrolled in an income-based repayment plan or is taking advantage of other federal repayment protections.

•   One of you has a much higher student loan balance, while the other has almost paid off their loans.

Refinancing Student Loans Jointly

On the other hand, there are compelling arguments for being married and refinancing student loans jointly.

Advantages of refinancing jointly	Disadvantages of refinancing jointly
One of you is a stay-at-home parent who can’t qualify for refinancing alone.	It can be difficult to get out of spousal consolidation if your relationship sours.
You want to simplify your student loans into one single payment.	If your spouse dies before the loans are paid off, you’ll have to shoulder the burden alone (federal student loans are forgiven upon death only if held separately).
It’s possible you’ll both benefit from a lower interest rate than you’ll qualify for separately.	There are few lenders who allow spousal consolidation of student loans.

Refinancing student loans jointly may be right for you given one of these scenarios:

•   Your credit score and history are much weaker than your spouse’s, and you can’t afford the interest rate and loan terms you qualify for alone.

•   You’re a stay-at-home parent with no earned income, making it difficult to qualify separately.

•   It’s important to both of you to be on the same team financially.

Refinance Student Loans With SoFi

For some couples, a lower interest rate can mean more flexibility and a more manageable repayment plan. After all, the average graduate holds 8-12 student loans. That gives married couples 16-24 different loan payments to make each month. Refinancing together can transform a student loan mess into a single, affordable payment.

To see how refinancing might impact your student loans and your partner’s, take a look at SoFi’s student loan refinance calculator. With SoFi, there are no application or origination fees, and no prepayment penalties.

Thinking about refinancing your student loans? Save thousands of dollars thanks to flexible terms and low fixed or variable rates.

FAQ

Does getting married affect student loan payments for you and your spouse?

If you or your spouse is enrolled in an income-driven repayment plan, you may see your payments increase after marriage. You can potentially avoid higher payments by filing your taxes separately. However, you’ll forfeit the ability to use the student loan interest deduction.

Is my spouse responsible for my student loans?

Loans taken out before the marriage still belong to the original borrower. Your spouse is not responsible for them unless they cosigned the loans with you. You can choose to put both your names on your loans, and be equally responsible for the debt, by refinancing together.

Does marriage affect financial aid?

Marriage typically has a positive effect on qualifying for financial aid. If you are under 24 and married, your parents’ income will no longer be considered in financial aid calculations, but your spouse’s will — this usually means your household income drops. However, if your spouse has significant income or assets, that can negatively affect your eligibility for financial aid.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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