Conventional loans are primarily funded by private lenders and financial institutions, though the process is influenced by the secondary mortgage market and government-sponsored enterprises (GSEs). Conventional loans meet the guidelines set by the Federal Housing Finance Agency (FHFA), which allows them to be purchased by the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. To free up capital for more lending, mortgage lenders typically sell conventional loans on the secondary mortgage market.
Conventional loans offer down payments as low as 3% for qualified first-time homebuyers or 5% repeat buyers.
Enjoy some of the most competitive interest rates in the mortgage market, potentially saving you thousands over the life of your loan.
Unlike FHA loans, conventional loans don't require upfront mortgage insurance premium payments.
Available for both Primary Residence, Second Home, and for Investment properties.
Choose from various term options including 15, 20, and 30-year fixed-rate or adjustable-rate mortgages.
Once you reach 20% equity in your home, you can request to have the Private Mortgage Insurance removed.
Conventional loans offer higher loan limits compared to some government-backed loans, allowing you to purchase more expensive homes.
| 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 |
