Conventional Home Loans

Conventional Home Loans:
Smart Financing for Your Dream Home

Discover why conventional loans are the most popular mortgage option for homebuyers across America. With competitive rates, flexible terms, and lower monthly payments, find out if a conventional loan is your best path to homeownership.

Conventional Loan
Little House

What Are Conventional Loans?

Conventional loans are mortgage loans that are not insured or guaranteed by the federal government. They are available through private lenders, such as banks, credit unions, and mortgage companies.

As the most popular home loan option, conventional mortgages adhere to the guidelines set by Fannie Mae and Freddie Mac, the government-sponsored enterprises that purchase mortgages from lenders.

Key Features:

  • Available in fixed-rate and adjustable-rate options
  • Terms typically range from 10 to 30 years
  • Minimum credit score requirements typically start at 620
  • Down payments as low as 3% for qualified first-time homebuyers
  • Private Mortgage Insurance (PMI) required for down payments less than 20%

Key Benefits of Conventional Loans

Conventional loans offer numerous advantages for qualified borrowers seeking the best mortgage option

Lower Down Payment Options

Conventional loans offer down payments as low as 3% for qualified first-time homebuyers.

Competitive Interest Rates

Enjoy some of the most competitive interest rates in the mortgage market, potentially saving you thousands over the life of your loan.

No Upfront Mortgage Insurance

Unlike FHA loans, conventional loans don't require upfront mortgage insurance premium payments.

Flexible Loan Terms

Choose from various term options including 15, 20, and 30-year fixed-rate or adjustable-rate mortgages.

PMI Can Be Removed

Once you reach 20% equity in your home, you can request to have the Private Mortgage Insurance removed.

Higher Loan Limits

Conventional loans offer higher loan limits compared to some government-backed loans, allowing you to purchase more expensive homes.

Conventional Loan Eligibility Requirements

Understanding what lenders look for can help you prepare for the mortgage application process

Credit Score

Minimum Requirement

620+

Preferred Qualification

740+ for best rates

Your credit score is a major eligibility factor for a conventional loan and in determining your interest rate.

Debt-to-Income Ratio

Minimum Requirement

50% maximum

Preferred Qualification

36% or lower

This ratio compares your monthly debt payments to your gross monthly income. Lower DTI ratios demonstrate better ability to manage mortgage payments.

The Conventional Loan Process

A simple step-by-step guide to getting your conventional mortgage

1

Get Pre-Approved

Start with a pre-approval to understand your budget and show sellers you're a serious buyer. We'll review your credit, income, and assets.

Get Pre-Approved
2

Find Your Dream Home

Work with a real estate agent to find a home that meets your needs and falls within your pre-approved budget.

Find Your Dream Home
3

Submit Your Application

Complete a full mortgage application and provide all necessary documentation for underwriting.

Submit Your Application
4

Processing & Underwriting

We'll verify your information, order an appraisal, and ensure all requirements are met for loan approval.

Processing & Underwriting
5

Close On Your Loan

Review and sign your final loan documents, pay your closing costs, and receive the keys to your new home!

Close On Your Loan

How Do Conventional Loans Compare?

See how conventional loans stack up against other popular mortgage options

Feature Conventional FHA VA USDA
Minimum Down Payment 3-5% 3.5% 0% 0%
Minimum Credit Score 620+ 500+ No minimum (620+ typical) 640+ typical
Mortgage Insurance PMI required if down payment is less than 20% (can be removed) Upfront MIP + Annual MIP (cannot be removed for most loans) Funding fee (no monthly MI) Upfront guarantee fee + Annual fee
Property Type Restrictions Primary, secondary, investment Primary residence only Primary residence only Primary residence in rural areas only
Income Limits None for standard loans None None Limited to moderate incomes

Frequently Asked Questions

Get answers to common questions about conventional loans

What is the difference between a conforming and non-conforming conventional loan?

Conforming conventional loans meet the guidelines set by Fannie Mae and Freddie Mac, including loan limits. Non-conforming loans, like jumbo loans, exceed these limits or have other characteristics that don't meet standard guidelines.

How much of a down payment do I need for a conventional loan?

Conventional loans typically require a minimum down payment of 3% for first-time homebuyers and 5% for others. However, putting down 20% or more will help you avoid paying Private Mortgage Insurance (PMI) and may result in better interest rates.

What credit score do I need to qualify for a conventional loan?

The minimum credit score for a conventional loan is typically 620. However, a higher score (740+) will help you qualify for the best interest rates and terms.

Can I use gift funds for my down payment on a conventional loan?

Yes, conventional loans allow you to use gift funds for your down payment. However, the gift must be properly documented with a gift letter and proof that the funds have been transferred from the donor to you.

How long does it take to get approved for a conventional loan?

The timeline for conventional loan approval typically ranges from 30 to 45 days from application to closing. However, this can vary based on your financial situation, the property being purchased, and current market conditions.

What is Private Mortgage Insurance (PMI) and can it be removed?

PMI is insurance that protects the lender if you default on your loan. It's typically required when your down payment is less than 20%. PMI can be removed when you reach 20% equity in your home, either through requesting cancellation or through automatic termination when you reach 22% equity based on the original amortization schedule.

What are the current conventional loan limits?

Conventional loan limits are adjusted annually. For 2023, the conforming loan limit for one-unit properties is $726,200 in most areas, and up to $1,089,300 in high-cost areas. These limits vary by county and property type.

Can I refinance an FHA loan to a conventional loan?

Yes, many homeowners refinance from FHA to conventional loans, especially to eliminate the permanent FHA mortgage insurance. This is commonly done when you've built at least 20% equity in your home and your credit score has improved.

Ready to Take the Next Step Toward Homeownership?

Let us help you navigate the conventional loan process and find the perfect mortgage solution for your unique situation.

E Mortgage Capital. Inc.

NMLS#: 1396861

915 Highland Pointe Dr, Roseville, CA 95678, USA

3401 Mallory Ln, Franklin, TN 37067, USA

18071 Fitch, Irvine, CA 92614, USA

Notice To Texas Loan Applicants: Consumers wishing to file a complaint against a mortgage banker, or a licensed mortgage banker residential mortgage loan originator, should complete and send a complaint form to the Texas Department of Savings and Mortgage Lending, 2601 North Lamar, Suite 201, Austin, TX 78705. Complaint forms and instructions may be obtained from the department’s website at www.sml.texas.gov.

A toll-free consumer hotline is available at 1-877-276-5550. The department maintains a recovery fund to make payments of certain actual out of pocket damages sustained by borrowers caused by acts of licensed mortgage banker residential mortgage loan originators. A written application for reimbursement from the recovery fund must be filed with and investigated by the department prior to the payment of a claim. For more information about the recovery fund, please consult the department’s website at