Conventional Loans
Conventional loans aren't backed by a government program. With solid credit they're often the most cost-effective option over the life of the loan, and the mortgage insurance drops off once you reach 20% equity.
Best for: Buyers with good credit and a down payment of 3% or more who want lower long-term costs.
Key features
- Down payments from 3% for qualified buyers
- PMI cancels automatically at 20% equity
- Available for primary, second, and investment properties
- Often cheaper than FHA over time with strong credit
Typical requirements
- Typically a 620+ credit score (higher scores get better pricing)
- PMI required when you put down less than 20%
- Debt-to-income ratio generally under ~45%
- Loan amount within conforming limits (or it becomes a jumbo loan)
Conventional Loans FAQ
How much do I need to put down on a conventional loan?
As little as 3% for qualified first-time buyers, though 5–20% is common. More down means lower payments and, at 20%, no PMI.
When does PMI go away?
On conventional loans, PMI automatically terminates once your loan balance reaches 78% of the original value, and you can request removal at 80%.
Conventional or FHA — which is cheaper?
With strong credit, conventional is usually cheaper over time because PMI ends. With lower credit, FHA may be more accessible. Comparing real offers is the only way to be sure.
See any unfamiliar terms? Check the mortgage glossary.
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