A conventional loan is any mortgage not backed by a federal government agency — it follows guidelines set by Fannie Mae and Freddie Mac. With down payments as low as 3%, no mandatory mortgage insurance once you hit 20% equity, and availability for primary homes, second homes, and investment properties, conventional loans are the most versatile product in the market.
- Down payment as low as 3%
- No upfront MIP like FHA requires
- PMI cancellable at 80% LTV
- Primary, second home, and investment use
How people usually document income for this
What it gives you
Why people choose this one
No upfront mortgage insurance premium
Unlike FHA loans, conventional loans have no upfront MIP charge. The FHA's 1.75% upfront fee adds $7,000 to a $400,000 loan — conventional borrowers keep that money.
Cancellable PMI
If your down payment is under 20%, you'll pay PMI — but only until you reach 80% loan-to-value. At that point you can request cancellation, and it terminates automatically at 78% LTV.
Wide range of eligible properties
Conventional loans work for primary residences, vacation/second homes, and 1–4 unit investment properties — flexibility that government-backed loans often don't offer.
Pricing rewards a strong file
Conventional pricing tiers step down as the credit score rises and the loan-to-value falls, and a borrower above 740 with twenty per cent down sits in the best tier the agency market offers. For that profile it usually beats a government-backed programme, because there is no mortgage insurance to carry.
What you need
- Minimum credit score of 620; pricing tiers improve at 680, 700 and 740
- Debt-to-income ratio generally at or below 45%
- Two-year history of stable, verifiable employment and income
- Loan amount at or below the conforming limit for your county — designated high-cost areas are set higher
- Down payment of at least 3% for primary residence (5–10% for second home; 15–25% for investment property)
- Reserves of 2–6 months PITI depending on property type and down payment
Conventional vs. FHA
| Conventional | FHA | |
|---|---|---|
| Min. down payment | 3% | 3.5% |
| Min. credit score | 620 | 580 |
| Mortgage insurance | PMI, cancellable at 80% LTV | MIP: upfront 1.75% + monthly for life |
| Loan limit (2026) | Your county's limit | Floor to ceiling, by county |
| Investment property | Yes (15–25% down) | Primary only |
The sequence
How a file like this gets built
- 01
Credit and income review
We pull a soft credit check and review your income documentation to identify the best conventional product and rate tier for your profile.
- 02
Choose your term and structure
We'll present fixed vs. ARM options, lay out the PMI cost curve, and help you decide whether a buy-down makes sense for your situation.
- 03
Pre-approval and home shopping
With your pre-approval letter in hand, you'll shop knowing your exact budget — and sellers will take your offers seriously.
- 04
Underwriting, appraisal, and closing
We manage every step from appraisal order to clear-to-close, keeping you informed at each milestone so nothing slips through the cracks.
Questions
About conventional loan
What is the 2026 conventional conforming loan limit?
The FHFA sets a baseline conforming limit each year, and designated high-cost areas get a higher ceiling. Loan limits are set every year by the FHFA for conforming loans and by HUD for FHA, and they differ county by county. This demonstration does not publish the figures, because a number typed into a website goes stale the week it ships — look up the current limit for your own county before relying on one.
Do I need 20% down for a conventional loan?
No. Eligible first-time buyers can put down as little as 3% through Fannie Mae's HomeReady or Freddie Mac's Home Possible programs. You'll pay PMI until you reach 80% LTV, then it's cancellable.
How does PMI differ from FHA MIP?
PMI on a conventional loan is cancellable once your equity reaches 20% — it automatically terminates at 78% LTV. FHA MIP is typically required for the life of the loan if your down payment was under 10%, making conventional loans cheaper long-term for qualifying borrowers.
Can I use a conventional loan to buy an investment property?
Yes. Conventional loans allow 1–4 unit investment property purchases, typically requiring 15–25% down and qualifying credit. Government-backed FHA, VA, and USDA loans require owner-occupancy.
Demonstration form
Ask about a conventional loan
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