Conventional Fixed Rate Refinance — Lock the Rate for the Whole Term
A conventional fixed rate refinance needs a 620 credit score, and how much you can borrow depends on which kind you are doing: 97% of the value on a rate-and-term, 80% if you are taking cash out. The rate and the payment then stay put for the life of the loan, which is the whole point of choosing fixed.
Last updated August 2026 · reviewed by a licensed mortgage broker
★★★★★5.0 on GoogleNMLS #1630225 · verify on NMLS Consumer AccessLicensed in NJ · CT · FL (FL MLB 1987)Family owned since 2017 · Ridgefield, NJ
620Min Credit Score Conv. Refi
97%Max LTV Rate-Term Refi
80%Max LTV Cash-Out Refi
45%Max DTI Standard Guide
Your Answer Right Here
What Is a Conventional Fixed Rate Refinance?
A conventional fixed rate refinance replaces your existing mortgage with a new conventional loan at a locked interest rate that stays the same for the entire term — typically 10, 15, 20, or 30 years. Your principal and interest payment never adjusts. You can use a conventional fixed refinance to lower your interest rate, reduce your remaining loan term, eliminate private mortgage insurance once you reach 20% equity, or pull cash from your home for any purpose. According to the CFPB, refinancing makes the most financial sense when the new rate meaningfully reduces your monthly costs or advances a specific goal like debt payoff or equity access. As a mortgage broker we shop multiple loan programs so you are not limited to a single bank’s rate sheet.
Program Snapshot
Conventional Refinance Loan Options — Rate & Term vs. Cash-Out
Two main refinance paths exist under conventional fixed rate guidelines. Here is a side-by-side comparison of the key numbers:
Feature
Rate & Term Refinance
Cash-Out Refinance
Purpose
Lower rate, change term, remove PMI
Access equity for any use
Max LTV (Primary)
97%
80%
Min Credit Score (FICO)
620
620
Max DTI
45% (up to 49.99% with DU approve)
45% (up to 49.99% with DU approve)
Waiting Period After Purchase
None for most scenarios
6 months from closing
Mortgage Insurance Required
Above 80% LTV only
No — stays at or below 80% LTV
Available Terms
10, 15, 20, 25, 30-Year Fixed
15 or 30-Year Fixed
Investment Properties
Allowed (lower LTV)
Allowed (lower LTV)
How It Works
From Application to Closing — What to Expect
The process from application to closing on a conventional refinance typically runs 21 to 45 days. Here is what to expect at each stage:
Conventional Fixed Rate Refinance — Typical timeline 21 to 45 days from application to funding.
Full Guidelines
Program Requirements — Credit, Equity, Income & Property
Fannie Mae and Freddie Mac set the guidelines for conventional fixed rate refinance loans. These are the requirements our wholesale lenders underwrite to:
● Credit Score & Credit History
Minimum FICO of 620 for conventional fixed rate refinance. No major derogatory credit within 12 months of application for most programs. Borrowers with scores above 740 receive the most favorable pricing adjustments. Fannie Mae publishes full loan-level price adjustment tables for credit and LTV combinations.
● Loan-to-Value Limits
Rate and term refinance: up to 97% LTV on a primary residence with no cash back. Cash-out refinance: maximum 80% LTV on a primary residence. Second homes refinance to 90% LTV rate and term or 75% LTV cash-out. Investment properties: 75% LTV rate and term, 70% LTV cash-out. A current appraisal establishes your home’s value.
● Debt-to-Income Ratio
Standard guidelines cap DTI at 45%. A Desktop Underwriter (DU) Approve/Eligible finding can take you to 49.99%. DTI is calculated as total monthly debt obligations divided by gross monthly income.
● Income & Employment
Two-year employment history is required. W-2 borrowers provide the most recent 30 days of pay stubs and two years of W-2s. Self-employed borrowers provide two years of personal and business tax returns. Income must be stable and reasonably expected to continue for at least three years.
● Reserves & Assets
Most conventional refinance programs require two months of PITI (principal, interest, taxes, and insurance) in verified reserves after closing. Investment property refinances typically require six months of reserves. Retirement accounts, checking, and savings all qualify. Reserves are verified with the two most recent statements.
● Property & Occupancy
Single-family homes, condominiums (warrantable), townhomes, and 2-4 unit properties are eligible. The property must meet conventional appraisal standards. Primary residences, second homes, and investment properties all qualify. Non-warrantable condos are typically handled through Non-QM programs. See our Non-QM page for alternatives.
Choose Your Term
Fixed Rate Term Options — Which Is Right for You?
A key advantage of a conventional fixed rate refinance is flexibility in term selection. Each term option serves a different financial goal:
30-Year Fixed Refinance
Lowest monthly payment of any fixed term. Best for homeowners who want maximum cash flow or need to stretch payments to stay within DTI limits. Total interest paid is highest over life of loan.
15-Year Fixed Refinance
Significantly lower interest rate than the 30-year. Builds equity faster and dramatically reduces total interest. Monthly payment is higher — typically best for borrowers within 10 to 15 years of payoff who can absorb the increase.
10 or 20-Year Fixed
Less common but available through wholesale lenders. A 20-year balances rate savings and payment. A 10-year is the most aggressive payoff path — right for high-income borrowers prioritizing interest savings over everything else.
Why Your Lender Choice Matters
Why Use a Mortgage Broker to Shop Your Refinance
When you go to a retail bank for a refinance, you get one rate from one lender. As a mortgage broker, Mortgage-World.com shops your file against multiple loan programs simultaneously. Wholesale rates are typically lower because the lender does not carry the overhead of a branch network. Fannie Mae’s refinance guidelines allow lenders latitude in pricing and overlays — access to our lender network means you benefit from real competition. We have been placing borrowers since 2017 across NJ, CT, and FL. See our NJ Conventional Loan page and NJ Cash-Out Refinance page for more.
Break-even matters. A conventional fixed rate refinance makes sense when the monthly savings covers your closing costs within a reasonable time horizon — typically 18 to 36 months. We calculate your break-even point before you commit. Start your free refinance analysis now.
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Common Questions About Conventional Fixed Rate Refinancing
What is the minimum credit score for a conventional fixed rate refinance?
The minimum FICO score for a conventional fixed rate refinance is 620 under Fannie Mae and Freddie Mac guidelines. Borrowers with scores between 620 and 679 will see higher pricing adjustments. The best rates go to borrowers above 740. If your score is below 620, ask us about FHA refinance alternatives — the FHA minimum is 500 with 10% equity, or 580 with less equity.
How much equity do I need to do a conventional refinance?
For a rate and term refinance you need at least 3% equity — the maximum LTV is 97% on a primary residence. To eliminate private mortgage insurance you need 20% equity (80% LTV). For a cash-out refinance the maximum LTV is 80%, so you need at least 20% equity before you take cash out. Second homes are capped at 90% rate and term or 75% cash-out. Investment properties are 75% rate and term or 70% cash-out.
How long does a conventional fixed rate refinance take to close?
A conventional fixed rate refinance typically closes in 21 to 45 days from application. The timeline depends on appraisal scheduling, how quickly documentation is provided, and lender underwriting queues. Streamlined no-appraisal refinances through Fannie Mae’s DU refi option can close faster. Once the loan is approved and closing documents are signed, funds are disbursed after a three-business-day right of rescission on primary residence refinances.
Can I do a cash-out refinance on an investment property with a conventional fixed rate loan?
Yes. Conventional cash-out refinance is available on investment properties with a maximum LTV of 70%. The minimum FICO is 620 and the waiting period is six months from the original purchase closing. Reserves requirements are typically six months of PITI. If you need higher LTV or do not meet agency guidelines, our Non-QM and DSCR programs may be an alternative worth exploring.
Does a conventional fixed rate refinance have a prepayment penalty?
No. Conventional loans sold to Fannie Mae or Freddie Mac do not carry prepayment penalties. You can sell your home, refinance again, or make extra principal payments at any time without penalty. This is one of the key advantages of conventional agency financing compared to some Non-QM or portfolio loan programs.
Is private mortgage insurance required on a conventional refinance?
PMI is required on conventional loans with an LTV above 80%. For a rate and term refinance where the new LTV is above 80%, PMI will apply to the new loan. However, if you have reached 20% equity in your home, refinancing is an opportunity to structure the new loan at or below 80% LTV and eliminate PMI entirely — which can add meaningfully to your monthly savings.
What is the maximum debt-to-income ratio on a conventional refinance?
45% under standard guidelines. A Desktop Underwriter Approve/Eligible finding can take you to 49.99%.
Should I refinance into a shorter term?
If the payment still works, yes — a 15-year costs far less in total interest than a 30. The trap is refinancing a 30-year you are eight years into back to another 30-year at a lower rate and calling it a saving. The rate went down and the interest bill went up.
How long before a refinance pays for itself?
Divide the closing costs by what you save each month. If that comes to more months than you plan to keep the house, it does not pay for itself, and no rate makes that arithmetic work. We give you the number before you apply, not after.
Can I refinance if my home has dropped in value?
It depends how far. Rate-and-term goes to 97% of the current appraised value, so there is room if the fall was modest. Below that you are looking at whether the loan is agency-backed and whether a high-LTV program applies — worth a call rather than a guess, because the answer turns on who owns your loan.
Send your current rate, roughly what the place is worth and what you still owe. A licensed loan officer will run rate-and-term against cash-out on your numbers and tell you how long it takes to earn back the closing costs — which is the number that decides whether it is worth doing at all.
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