Traditional home financing with competitive rates and flexible terms. Perfect for primary residences, second homes, and investment properties with strong credit and stable income.
A Conventional Loan is a traditional mortgage not insured or guaranteed by the federal government. These loans are backed by private lenders and conform to guidelines set by Fannie Mae and Freddie Mac, making them one of the most popular mortgage options in the United States.
Conventional loans typically offer competitive interest rates for borrowers with good credit and stable income. They're available for primary residences, second homes, and investment properties, with loan amounts ranging from modest starter homes to luxury properties.
Borrowers with 20%+ down payment and 740+ credit score get the most competitive rates in the market.
Discover the comprehensive benefits of conventional home loans
Conventional loans often have lower interest rates and fees compared to government-backed loans, especially for borrowers with excellent credit and substantial down payments.
Private Mortgage Insurance (PMI) can be removed once you reach 20% equity, either through payments or home appreciation, unlike FHA loans where MIP is often permanent.
Use for primary residences, second homes, vacation properties, and investment properties. More flexible than FHA loans which are primarily for primary residences.
Borrowers with credit scores above 740 receive the most favorable interest rates and terms, rewarding financial responsibility with significant savings.
Unlike FHA loans that require 1.75% upfront mortgage insurance premium, conventional loans only have monthly PMI when putting less than 20% down.
Available through virtually all mortgage lenders, giving you more options to shop for the best rates and service.
Conventional financing offers flexibility for various property types and uses
Understanding the difference between conventional loan types
Loan amounts within FHFA limits, backed by Fannie Mae and Freddie Mac
Loan amounts exceeding conforming limits for luxury and high-cost areas
Flexible options and competitive terms for qualified borrowers
Explore refinancing options to lower your rate, change your term, or access equity
Straightforward 5-step process to secure your conventional loan
Get pre-qualified to understand your budget, then submit full application for pre-approval. Provide income documentation, tax returns, and bank statements.
Shop for homes within your approved amount. Once you find the right property, make an offer and sign the purchase agreement with your pre-approval letter.
Lender orders professional appraisal to confirm home value. You should also conduct home inspection to identify any issues. Typical turnaround is 7-10 days.
Underwriter reviews all documentation, verifies income and assets, and confirms property value. May request additional documents. Approval typically within 2-3 weeks.
Receive final approval (Clear to Close), schedule closing date, review closing disclosure, and sign all documents. Get your keys and move into your new home!
A conventional loan is a mortgage that isn't backed by a government agency like the FHA, VA, or USDA. These loans follow guidelines set by Fannie Mae and Freddie Mac and are the most common type of mortgage.
Key characteristics include:
Pre-approval is a formal commitment from a lender after they verify your income, assets, credit history, and employment. This involves a credit check and document review. Pre-approval makes your offer stronger when buying because sellers know you're a serious, qualified buyer.
The minimum credit score for a conventional loan is typically 620, but scores of 740 or higher will help you qualify for the best rates and terms.
Credit score tiers and their impact:
Other factors that influence approval:
Some lenders may allow earlier PMI removal if you get a new appraisal showing your home has increased in value. Keep in mind there may be fees associated with the appraisal and removal process.
Down payment requirements for conventional loans vary based on several factors:
First-time homebuyers:
Standard conventional loans:
The benefits of larger down payments:
Remember: The down payment isn't your only upfront cost. You'll also need funds for closing costs, which typically range from 2-5% of the home price.
Speak with a loan officer about your home financing options