Conventional loans are the most common type of mortgage in the country, and for good reason. They're not backed by a government agency like FHA or VA loans, which means underwriting can be more flexible on property type and loan structure — but the trade-off is that qualification typically leans more heavily on credit and reserves.
For many borrowers, a conventional loan ends up being the most cost-effective long-term option, especially once enough equity is built to remove mortgage insurance altogether.
Key Benefits
Low Down Payment Options
Programs like HomeReady and Home Possible allow qualified first-time buyers to put down as little as 3%.
PMI That Can Go Away
Unlike FHA mortgage insurance, conventional PMI can typically be removed once you reach sufficient equity.
Flexible Property Types
Primary residences, second homes, and investment properties can all typically be financed conventionally.
Fixed or Adjustable Terms
Choose the structure — and term length — that fits your plans, whether you're staying long-term or expect to move in a few years.
Eligibility at a Glance
- Credit score requirements are generally higher than FHA, though exact minimums vary by lender and loan program.
- Down payments as low as 3% may be available for qualified first-time buyers; others may require more.
- Debt-to-income ratio and reserve requirements are evaluated as part of underwriting.
- Property must typically meet conventional appraisal and condition standards.
- All eligibility is subject to qualification and lender guidelines.
How It Works
A Quick Conversation
We'll talk through your goals, income, and timeline to see how a conventional loan fits your plans.
Pre-Approval
Once we've gathered your documents, you'll get a clear picture of what you can qualify for — so you can shop with confidence.
From Offer to Closing
I'll guide you through underwriting, appraisal, and closing, keeping you informed at every step.
FHA vs. Conventional at a Glance
| Feature | FHA | Conventional |
|---|---|---|
| Down Payment | 3.5% minimum (580+ credit) | As low as 3% for qualifying first-time buyers |
| Credit Flexibility | More forgiving; scores in the 500s may qualify with more down | Generally requires stronger credit for the best terms |
| Mortgage Insurance | MIP — upfront + monthly; often lasts the life of the loan | PMI — monthly only; can be removed once you build equity |
| Debt-to-Income | Flexible, up to roughly 50% considered | Typically capped in the mid-40s% |
| Best Fit | Buyers with limited savings or a developing credit profile | Buyers with stronger credit seeking long-term flexibility |
General guidelines only — individual terms vary by lender and borrower profile. Subject to qualification.
Frequently Asked Questions
What credit score do I need for a conventional loan?
Requirements vary by lender and specific program, but conventional loans generally call for stronger credit than government-backed options. The best way to know where you stand is a quick pre-approval conversation.
Can I use a conventional loan for an investment property?
Yes, in many cases — though down payment and reserve requirements are typically higher than for a primary residence, subject to qualification.
How do I get rid of PMI on a conventional loan?
Once you reach a certain equity threshold, you can typically request PMI removal, or it may cancel automatically. I can walk you through the specifics for your loan.
What's the maximum conventional loan amount in California?
Conforming loan limits vary by county and are updated periodically, with several California counties qualifying for higher limits due to local home prices. I can check the current limit for your specific area.
Do conventional loans require mortgage insurance?
Only if your down payment is below 20%. Unlike FHA's MIP, conventional PMI can typically be removed once you reach roughly 20% equity.