Flexible terms, low rates, and down payments starting at just 3%.
What Is a Conventional Loan?
A Conventional loan is a mortgage that isn’t insured by the government (unlike FHA Loans or VA). These loans follow guidelines from Fannie Mae and Freddie Mac and reward borrowers with solid credit, stable income, and manageable debt.
Conventional loans are the most common home loan in America — ideal for buyers who want competitive rates, lower monthly mortgage insurance, and long-term affordability.
⭐ Why Choose a Conventional Loan?
- Down payments as low as 3%
- Lower mortgage insurance costs than FHA
- Mortgage insurance drops off automatically at 20% equity
- Competitive fixed and adjustable rates
- Strong option for good-credit buyers
- Ideal for first-time and repeat homebuyers
If you’re comparing loan programs, Conventional is often the best fit for borrowers with stronger credit or higher income stability.
🚀 See If You Qualify
Conventional loans offer some of the best pricing in today’s market.
👉 Get Pre-Qualified for a Conventional Loan »
(No hard credit pull)
Who Qualifies for a Conventional Loan?
Conventional loans are a great fit for buyers who have:
- A 620+ credit score
- Consistent income and employment history
- A debt-to-income ratio typically below 50%
- The ability to make a 3%–20% down payment
Even if your credit isn’t perfect, you may still qualify — and rates improve as your score rises.
If your credit or down payment is limited, compare with an FHA loan here:
👉 FHA vs Conventional Loan Comparison
Conventional Loan Mortgage Insurance (PMI)
Conventional loans require private mortgage insurance (PMI) if your down payment is under 20%.
But unlike FHA:
- PMI is cheaper
- PMI can be removed once you reach 20% equity
- PMI automatically drops off at 78% loan-to-value
This makes Conventional loans more cost-effective over time for many buyers.
Conventional Loan Example
| Description | Amount |
|---|---|
| Purchase Price | $350,000 |
| Down Payment (5%) | $17,500 |
| Loan Amount | $332,500 |
| Approx. Monthly Payment | ~$2,050/mo (includes PMI, taxes, insurance) |
To calculate exact payments, use our Mortgage Payment Calculator.
Conventional vs. FHA Loans
| Feature | Conventional | FHA |
|---|---|---|
| Down Payment | 3%–20% | 3.5% |
| Credit Score | 620+ | 580+ |
| Mortgage Insurance | Drops at 20% equity | Stays for the life of the loan (mostly) |
| Ideal For | Good credit, stable income | Lower credit or limited savings |
| Rates | Competitive | Often slightly higher |
Many buyers qualify for both FHA and Conventional — the right one depends on credit, savings, and monthly payment goals.
When a Conventional Loan Is the Best Option
Conventional loans are ideal when:
- You have a strong credit score
- You want the lowest long-term cost
- You prefer PMI that can be removed
- You’re buying a primary residence, second home, or investment property
For investors, compare with DSCR Loans.
Why Work With AskMortgageAuthority.com
We help you:
- Compare Conventional loan programs
- Maximize your down payment options
- Understand PMI removal timelines
- See how Conventional stacks up against FHA, Jumbo, and Non-QM
- Estimate monthly payments with our calculators
- Move from pre-qualification to closing with clarity
No pushy sales. Just clear, expert guidance.
Start Your Conventional Loan Path Today
The right mortgage doesn’t have to be confusing.
We guide you every step of the way.
👉 Get Pre-Qualified for a Conventional Loan »
Conventional Loan FAQs
What credit score do I need for a Conventional loan?
A score of 620 or higher is typically required. Higher scores get better rates.
How much down payment do I need?
You can buy with 3% down as a first-time buyer. Many choose 5%–20% to lower PMI.
Does PMI go away on a Conventional loan?
Yes — PMI can be removed once you reach 20% equity, and it drops off automatically at 78% LTV.
Can I use gift funds for Conventional loans?
Yes. Gift funds are allowed for down payment and closing costs on primary residences.
Is a Conventional loan better than FHA?
If you have stronger credit and want lower long-term costs, yes.
If you have lower credit or higher DTI, FHA may be a better fit.