What is a conventional loan?
A conventional loan is a mortgage that isn’t backed by a government program like FHA, VA, or USDA. Instead it follows guidelines set by Fannie Mae and Freddie Mac. It’s the most widely used home loan in the country, prized for its flexibility and — for buyers with solid credit — its strong terms.
Conventional financing can require as little as 3% down for qualified first-time buyers (5% or more for others), and unlike FHA, the private mortgage insurance (PMI) can be cancelled once you reach about 20% equity — which can save money over time. Conventional loans also work for primary residences, second homes, and investment properties.
If you have decent credit and some down payment, conventional is often the loan to beat — but not always. The right choice depends on your credit, down payment, and goals, which is why we’ll compare conventional against FHA, VA, and USDA so you can see the real difference.
Why buyers choose Conventional Loans
As Little as 3% Down
Qualified first-time buyers may put down just 3%, with flexible options for everyone else. Subject to eligibility.
Cancellable PMI
Unlike FHA, conventional mortgage insurance can be removed once you reach about 20% equity — saving you money down the road.
Primary, Second & Investment
Conventional loans can finance a home you live in, a vacation home, or an investment property. Terms vary by occupancy.
Strong Terms for Good Credit
The better your credit, the more competitive your conventional terms tend to be. Subject to underwriting.
You might be a great fit if…
Conventional loan basics
Down Payment
As little as 3% down for qualified first-time buyers; 5% or more is common otherwise. Subject to eligibility.
Mortgage Insurance (PMI)
Required with less than 20% down, but it can be cancelled once you reach about 20% equity — a key advantage over FHA.
Credit Matters
Conventional loans reward stronger credit with better terms. We’ll help you understand where you stand, subject to underwriting.
Getting Approved
We compare conventional against your other options and give you a real answer quickly. Subject to credit and underwriting approval.
See what a conventional loan might cost per month
Enter a home price to see an estimated monthly payment. Educational estimate only — not a quote or an offer.
Important: Illustrative estimate for educational purposes only — not a loan offer, rate quote, pre-qualification, or commitment to lend. The sample rate is not an offered rate; conventional PMI applies under 20% down and can later be removed; actual rates change daily and depend on your credit, down payment, loan program, and property. Principal and interest only — taxes, insurance, HOA, and mortgage insurance are not included and will increase your payment. Not all applicants qualify. All loans subject to credit approval, income verification, appraisal, and underwriting. Equal Housing Lender.
Ready to see your real numbers? A licensed loan officer will walk you through it — no obligation.
Common questions
How much do I need down for a conventional loan?
Qualified first-time buyers may put down as little as 3%, while others typically start around 5%. More down can mean better terms and no PMI at 20%. We’ll find the sweet spot for your budget, subject to underwriting.
Can I cancel PMI on a conventional loan?
Yes — a major advantage of conventional loans. Once you reach about 20% equity, PMI can generally be removed, unlike FHA mortgage insurance which often lasts the life of the loan.
Is a conventional loan better than FHA?
For buyers with solid credit and some down payment, conventional is often cheaper over time — especially because PMI can be cancelled. But FHA can win for lower credit or smaller down payments. We compare both at no cost.
Can I use a conventional loan for an investment property?
Yes. Conventional financing can be used for primary homes, second homes, and investment properties, though terms and down payment vary by occupancy. If you’re an investor, we can also compare it against a DSCR loan.
What credit do I need for a conventional loan?
Conventional loans generally reward stronger credit with better terms, but there’s more flexibility than many buyers assume. A quick, no-pressure pre-approval review will tell you exactly where you stand.
Compare conventional to your other options
Get a real, personalized answer from a licensed loan officer — usually the same day. All loans subject to credit and underwriting approval.