Conventional Mortgages
Flexible Mortgage Options for Buyers With Strong Credit and Stable Income
Get competitive rates with the most flexible home loan available to home buyers nationwide. Conventional loans can be used for primary homes, second homes, and investment properties, with down payment options as low as 3% for qualified buyers.
- Credit score: Typically 620+ minimum, with stronger scores helping improve pricing and PMI options.
- Down payment: As low as 3% for qualified buyers, though 5%, 10%, and 20% down are also common.
- Income and debt: Stable, verifiable income and an acceptable debt-to-income ratio based on the full loan profile.
What is a Conventional Mortgage?
A conventional loan is one of the most common mortgage options for homebuyers and homeowners. Unlike FHA, VA, or USDA loans, conventional loans are not directly backed by the federal government. Instead, they are offered through private lenders and typically follow guidelines set by Fannie Mae and Freddie Mac.
For many buyers, a conventional mortgage can offer competitive interest rates, flexible down payment options, and fewer long-term costs compared with some government-backed loans.
Conventional Loans Can Be Used to Buy or Refinance
- Primary residences
- Second homes
- Investment properties
- Single-family homes
- Condos
- Townhomes
- Multi-unit properties, depending on eligibility
Conventional Loan Requirements
Conventional loan requirements vary by lender, loan program, borrower profile, and property type. In general, lenders review several major factors.
Credit Score
Many conventional loan programs require a minimum credit score around 620, though a higher score can help you qualify for better pricing, lower mortgage insurance, and stronger approval terms. For many buyers, a conventional mortgage can offer competitive interest rates, flexible down payment options, and fewer long-term costs compared with some government-backed loans.
Down Payment
Some conventional loan programs allow down payments as low as 3% for qualified buyers. Other common down payment options include 5%, 10%, 15%, and 20%. A 20% down payment is not required, but putting 20% down can help you avoid private mortgage insurance.
Debt-to-Income Ratio
Your debt-to-income ratio compares your monthly debt payments to your gross monthly income. A lower DTI can strengthen your approval, but some borrowers may qualify with higher ratios depending on credit, assets, down payment, and overall loan profile.
Property Type
Conventional loans can be used for many property types, but condos, investment properties, and multi-unit properties may require additional review.
Conventional Loans vs FHA Loans
Conventional and FHA loans are both popular options, but they serve different borrower profiles.
A conventional loan may be better for borrowers with stronger credit, more flexibility in down payment, or a goal of removing mortgage insurance later.
An FHA loan may be better for borrowers with lower credit scores, higher debt-to-income ratios, or limited savings.
Conventional Loans
– Not government backed
– As low as 3% down for qualified buyers
– PMI removed after 20% equity
– Strong credit a priority
– Primary residences, second homes, or investments
FHA Loans
– Government backed
– As low as 3.5% down
– Upfront and mandatory PMI
– Flexible credit score requirements
– Primary residence only
Benefits of a Conventional Loan
Conventional loans offer several advantages:
- Low down payment options for qualified buyers
- Competitive interest rates for strong borrowers
- No upfront FHA-style mortgage insurance premium
- PMI may be removable
- Can be used for second homes and investment properties
- Flexible loan terms
- Options for fixed-rate or adjustable-rate mortgages
- Strong fit for buyers with good credit and stable income
Drawbacks of a Conventional Loan
Potential drawbacks include:
- Higher credit standards than some government-backed loans
- PMI required with less than 20% down
- Pricing can change based on credit score, down payment, and property type
- Condo approvals may require additional review
- Investment properties usually require stronger qualifications
Frequently Asked Questions
A conventional loan is a mortgage that is not directly backed by a government agency. Most conventional loans follow Fannie Mae or Freddie Mac guidelines and are commonly used to buy or refinance homes.
Many conventional loan programs require a minimum credit score around 620, but higher credit scores can help borrowers qualify for better rates, lower PMI, and stronger loan terms.
Yes. Some conventional loan programs allow qualified buyers to purchase a home with as little as 3% down.
Conventional loans usually require private mortgage insurance when the borrower puts less than 20% down. PMI may be removable once the borrower builds enough equity.
A conventional loan may be better for borrowers with stronger credit, while FHA may be better for borrowers who need more flexible credit or debt-to-income guidelines. The best option depends on the borrower’s full financial profile.
Yes. Conventional loans can be used for investment properties, though requirements are usually stricter than for a primary residence.
Yes. Seller credits may be allowed on conventional loans, but the maximum contribution depends on down payment, occupancy, and loan guidelines.