Conventional loans are the backbone of mortgage lending, offering flexibility and competitive terms for borrowers with strong credit, stable income, and manageable debt. Unlike FHA or VA loans, they are not backed by a government agency; they are funded and serviced by private lenders and often conform to guidelines set by Fannie Mae and Freddie Mac.
For qualified buyers, conventional loans can require as little as 3% down for primary residences. If you can put 20% down, you can avoid private mortgage insurance (PMI) entirely. Even if you start with PMI, it can be removed once you reach 20% equity, unlike FHA loans, where mortgage insurance often remains for the life of the loan.
Loan limits vary by county, but high-cost areas allow for higher thresholds before transitioning into a jumbo loan. Conventional loans are available for primary homes, vacation properties, and investment real estate giving you more options if you’re building a portfolio.
Rates for conventional loans tend to reward borrowers with higher credit scores (typically 740+ for the best pricing), but you can still qualify with a score of 620 or even slightly lower with strong compensating factors. Debt-to-income (DTI) ratios are generally capped at 45%, though in some cases they can go higher with strong credit or reserves.
Because of their versatility, conventional loans are an excellent choice for borrowers who want predictable fixed payments or flexible adjustable-rate options. They’re also ideal for those planning to stay in their home long-term, those looking to avoid mortgage insurance, or buyers seeking competitive interest rates.
If you’re wondering whether a conventional loan is right for you, the best step is to compare scenarios side-by-side with other loan types. With your financial profile, we can run those numbers and show you exactly how much you’d save over time and how quickly you can build equity.
