Conventional Loans
The most widely used mortgage — flexible terms, competitive rates, no upfront mortgage insurance.
Program Overview
Conventional loans are not backed by a government agency — they follow guidelines set by Fannie Mae and Freddie Mac. Because of this, they typically require stronger credit and a larger down payment than government-backed loans, but they offer greater flexibility in property types, loan structures, and cancellable mortgage insurance.
Conventional loans include both conforming loans (within county loan limits) and jumbo loans (above those limits). For borrowers with good credit and moderate down payments, conventional loans often offer the lowest total cost of borrowing — especially with private mortgage insurance (PMI) that can be removed once you reach 20% equity.
At a Glance
Who May Qualify
- Minimum 620 credit score (680+ recommended for best rates)
- Stable income and employment — typically 2 years documented
- Down payment as low as 3% for first-time buyers (Fannie Mae HomeReady / Freddie Mac Home Possible)
- Maximum DTI typically 45–50%
- Primary residences, second homes, and investment properties
- Loan amounts up to conforming limits (or jumbo above)
Advantages
- PMI is cancellable once you reach 20% equity
- No upfront mortgage insurance premium
- Available for investment properties and second homes
- Higher loan limits than FHA in many counties
- Lower total cost for borrowers with strong credit
- More property type flexibility
Considerations
- Stricter credit and income documentation requirements
- Higher down payment needed to avoid PMI
- Less flexible DTI limits vs. FHA
- May not be ideal for borrowers with recent credit events
Conventional loan guidelines are set by Fannie Mae and Freddie Mac and are subject to lender overlays and market changes. Contact a licensed loan officer for current rates and eligibility.
Ready to See If You Qualify?
Get a free personalized review from Alberto Cruz — a licensed loan officer who works with all of these programs daily.