Conventional Loans
The most popular mortgage in America — flexible terms, competitive rates, and a clear path to homeownership with as little as 3% down.
If you have good credit and a steady paycheck, this loan was built for you.
What Is a Conventional Loan?
A conventional loan is a mortgage that isn’t backed by a government agency like FHA, VA, or USDA. It’s offered through private lenders and typically follows guidelines set by Fannie Mae and Freddie Mac. This makes it one of the most versatile and widely used mortgage options available.
Conventional loans work for purchasing a primary home, a second home, or an investment property. They come in fixed-rate and adjustable-rate options, with terms ranging from 10 to 30 years. And if you put 20% down, you avoid mortgage insurance entirely.
Who Is This Best For?
Conventional financing tends to be the strongest fit for borrowers with good to excellent credit (typically 620+), stable income, and at least 3% to put down. It’s also the go-to option if you’re buying a second home or investment property, since government-backed loans usually don’t cover those.
If you’ve got solid financials and want the most flexibility in terms, rates, and property types — this is likely your best starting point.
What You’ll Need to Qualify
- Credit score: 620 minimum (740+ gets the best rates)
- Down payment: As low as 3% for first-time buyers, 5%+ for most borrowers
- Debt-to-income ratio: Generally 45% or below
- Income: Stable, verifiable employment or self-employment income
- Assets: Proof of savings for down payment and closing costs
If you put down less than 20%, you’ll pay private mortgage insurance (PMI) — but it drops off automatically once you reach 20% equity. That’s a big advantage over FHA loans, where mortgage insurance stays for the life of the loan.
Key Advantages of Conventional Loans
Low Down Payment Options
Put as little as 3% down on a primary residence. First-time buyer programs make this even more accessible with down payment assistance options.
No Mortgage Insurance with 20% Down
Unlike FHA loans, conventional loans let you skip mortgage insurance entirely when you put 20% down — and PMI drops off automatically once you build enough equity.
Flexible Property Types
Use a conventional loan for your primary home, a vacation property, or an investment rental. No other loan type gives you this much flexibility in one product.
Competitive Rates & Flexible Terms
Choose from fixed or adjustable rates with terms from 10 to 30 years. Strong credit scores are rewarded with some of the best rates available in the market.
Common Questions About Conventional Loans
How is a conventional loan different from FHA?
The biggest differences are mortgage insurance and credit requirements. FHA loans have lower credit minimums (580) but require mortgage insurance for the life of the loan. Conventional loans require a 620+ score but let you drop PMI once you hit 20% equity — saving you money long-term.
Can I use a conventional loan for an investment property?
Yes — conventional loans are one of the only options for financing investment and rental properties. You’ll typically need a larger down payment (15-25%) and slightly higher credit scores, but the rates are still competitive.
What if I don’t have 20% to put down?
You can put as little as 3-5% down. You’ll pay PMI, but it’s not permanent — it automatically drops off once your loan balance reaches 80% of the home’s original value. Many buyers start with a lower down payment and let appreciation do the rest.
How long does it take to close a conventional loan?
Most conventional loans close in 25-35 days from contract. With a solid pre-approval and responsive communication, we can often close faster. I keep you informed at every step so there are no surprises.
Let’s See If Conventional Is Right for You
No pressure. No obligation. Just clarity.
Most people start with a quick call — it makes everything easier.
Garry McDonald | NMLS #1922072 | DRE# 01781703 | (949) 534-6686