Conventional Loan
Conventional loans are not government-backed and follow guidelines set by Fannie Mae and Freddie Mac. They are a common choice for buyers with stable income and established credit.
Min. Down Payment
3% for first-time buyers; 5% for repeat buyers (standard programs)
Credit Guidance
Generally 620+ minimum; better rates available with 740+ credit scores
Income / DTI
Standard DTI limits; typically max 45-50% DTI depending on compensating factors
Occupancy
Primary residence, second home, or investment property
Property Types
Conventional loans are the most common mortgage type in the United States. They are not insured by the federal government — instead, they follow underwriting guidelines established by Fannie Mae and Freddie Mac, the two government-sponsored enterprises that purchase most conventional mortgages from lenders. Conventional loans offer broad flexibility: they can be used for primary residences, second homes, and investment properties. Down payment requirements vary by program, buyer status, and qualifying factors. One of the most notable advantages of conventional loans over FHA is the ability to remove private mortgage insurance (PMI) once you reach 20% equity. With FHA, mortgage insurance often stays for the life of the loan (if the down payment is under 10%), which can make conventional a more cost-effective choice over time for buyers who qualify. The right loan type depends on your full financial picture. Your loan officer can compare FHA vs. conventional side-by-side for your specific scenario.
Key Benefits
- PMI can be removed once you reach 20% equity — unlike FHA's lifetime MIP in many cases
- Available for primary residences, second homes, and investment properties
- No upfront mortgage insurance premium
- Higher loan limits than FHA in many counties
- Down payment options starting as low as 3% for eligible first-time buyers
Considerations
- Generally requires a stronger credit profile than FHA
- PMI is required when the down payment is under 20%
- Qualifying standards may be stricter for self-employed or variable-income borrowers
Common Misconceptions
- • You do not need 20% down for a conventional loan
- • Conventional loans can also be used by first-time buyers
- • PMI is not permanent — it can be removed
Frequently Asked Questions
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Work Hard Mortgage · NMLS #2396714 · Equal Housing Opportunity · Licensed in Utah. Program availability and guidelines may change. Final eligibility depends on credit, income, assets, property type, occupancy, and underwriting approval.