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
View VA Loans DetailsFHA Loans
3.5% down with flexible credit requirements
View FHA Loans DetailsUSDA Loans
Zero down payment for rural and suburban homes
View USDA Loans DetailsJumbo Loans
Financing for luxury homes above conforming limits
View Jumbo Loans DetailsNon-QM Loans
Alternative documentation for self-employed borrowers
View Non-QM Loans DetailsReady to Get Started?
Apply now or check your eligibility with Valor Home Mortgage
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