Conventional Home Loans
What Is a Conventional Loan?
Conventional loans are the most common type of home financing in the U.S. They're not insured by a government agency like the VA, FHA, or USDA. Instead, they follow guidelines set by Fannie Mae and Freddie Mac.
Because of their flexibility and competitive terms, conventional mortgages are a great fit for borrowers with solid credit, steady income, and moderate down payments.
Benefits of a Conventional Loan
Discover why conventional loans are the most popular home financing choice in America.
Flexible Down Payment Options
Buy a home with as little as 3% down through programs like HomeReady® and Home Possible®. Higher down payments eliminate mortgage insurance sooner.
No Upfront Mortgage Insurance
Unlike FHA loans, conventional loans don't require an upfront mortgage insurance premium. PMI drops off automatically at 20% equity.
Wide Range of Loan Terms
Choose from 10, 15, 20, or 30-year fixed-rate mortgages, or adjustable-rate options (ARMs) for added flexibility.
Ideal for All Property Types
Finance primary residences, vacation homes, or investment properties — giving you more freedom than government-backed loans.
Conventional Loan Requirements
Lenders look at several factors when qualifying borrowers for a conventional loan.
Credit Score
Minimum of 620, but higher scores unlock better rates
Down Payment
Minimum 3%, though 5–20% is more common
DTI Ratio
Typically 45% or less, depending on other strengths in your profile
Property Standards
Must meet Fannie/Freddie appraisal guidelines
Loan Limits
Must fall within conforming loan limits set annually by FHFA
Who Should Consider a Conventional Loan?
Ideal Borrowers
- Have good to excellent credit
- Want to avoid upfront mortgage insurance
- Are buying a second home or investment property
- Can afford a moderate to higher down payment
Potential Drawbacks
- Stricter credit requirements than FHA or VA loans
- Mortgage insurance required under 20% down
- Higher rates for lower credit scores or small down payments
Conventional Loan FAQs
Compare Other Loan Programs
Not sure if a conventional loan is right for you? Explore these alternative financing options.
VA Loans
No down payment for veterans and service members
Learn MoreFHA Loans
3.5% down with flexible credit requirements
Learn MoreUSDA Loans
Zero down payment for rural and suburban homes
Learn MoreJumbo Loans
Financing for luxury homes above conforming limits
Learn MoreNon-QM Loans
Alternative documentation for self-employed borrowers
Learn MoreReady to Get Started?
Apply now or check your eligibility with Valor Home Mortgage
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