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Conventional Loan

The most widely used home loan in America. Conventional financing offers competitive rates, down payments as low as 1% for qualified buyers, and mortgage insurance that may be removable once requirements are met.

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What is a Conventional Loan?

A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA or USDA. Most conventional loans follow guidelines set by Fannie Mae and Freddie Mac, which is why they are also called conforming loans. They can be used for a primary residence, a second home or an investment property.

Low down payment

As low as 1% down for qualified buyers; 3% to 20% is common.

Removable PMI

Private mortgage insurance may be removable once you build enough equity and meet the requirements.

Any occupancy

Finance a primary home, vacation home or rental property.

Fixed or adjustable

Choose 30, 20, 15 or 10-year fixed terms, or an ARM.

Is a Conventional Loan right for you?

Who it is for

  • Buyers with established credit
  • Anyone who wants mortgage insurance that can be removed later
  • Buyers of second homes or rental properties
  • Borrowers with steady, documented W-2 or self-employed income

Benefits

  • Down payments as low as 1% for qualified buyers
  • PMI may be removable when requirements are met
  • Works for primary homes, second homes and investment properties
  • Often the lowest total cost for borrowers with good credit
  • Many term choices: 30, 25, 20, 15 and 10-year fixed plus ARMs

Things to consider

  • Stricter credit and debt-to-income guidelines than FHA
  • PMI cost rises quickly with lower credit scores
  • Loan amount is capped at the annual conforming limit
  • Longer waiting periods after bankruptcy or foreclosure

Everything about the Conventional Loan

Choose a topic to jump to the details.

Conventional loan requirementsHow much you need to put downPrivate mortgage insurance (PMI)Conforming loan limitsConventional vs. FHAWhat affects your conventional rateConventional Loan FAQs

Conventional loan requirements

Lenders look at your credit score, debt-to-income ratio (DTI), down payment and employment history. Requirements vary by program, and stronger credit usually earns better pricing. Your loan officer will review your full picture with you.

Most programs prefer a DTI at or below the mid-40s, although automated underwriting can approve higher ratios when other factors are strong. Expect to document two years of income with pay stubs, W-2s or tax returns.

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How much you need to put down

Fidelity offers down payments as low as 1% for qualified buyers. Standard conventional programs start at 3% for eligible first-time buyers and 5% for most others. Putting 20% down removes the need for private mortgage insurance entirely.

Gift funds from family are generally allowed on a primary residence, which can help cover the down payment and closing costs.

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Private mortgage insurance (PMI)

If you put down less than 20%, you will usually pay PMI. Unlike FHA mortgage insurance, PMI may be removable once you build enough equity and meet the requirements. Your loan officer will explain when and how it can come off your loan.

Your PMI cost depends on your credit score and down payment, so a small improvement in either can lower your monthly payment.

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Conforming loan limits

Conventional loans have a maximum loan amount that is updated every year and is higher in expensive housing markets. If you need to borrow more than the limit, a jumbo loan is the usual next step.

Your loan officer will confirm the current limit for your county before you make an offer.

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Conventional vs. FHA

FHA loans can be easier to qualify for with lower credit scores, but they carry mortgage insurance that often lasts for the life of the loan. Conventional loans usually cost less over time for borrowers with good credit.

We will price both side by side so you can see the real difference in payment and total cost.

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What affects your conventional rate

Conventional pricing is built on a grid of risk factors. The biggest drivers are:

  • Credit score, with pricing tiers roughly every 20 points
  • Loan-to-value, meaning how much you put down or how much equity you have
  • Occupancy: primary home, second home or investment property
  • Property type: condos and 2 to 4 unit properties can carry added costs
  • Loan purpose: cash-out refinances price higher than purchases

Because of this, two buyers applying on the same day can see very different rates. We quote your actual scenario, not a teaser rate.

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How to apply

  1. 1

    Request a call back

    Tell us about your goals. A loan officer will confirm whether this program is the right fit.

  2. 2

    We prepare the application

    We fill out the application with you and send a secure list of documents to upload.

  3. 3

    Approval and closing

    We handle appraisal, underwriting and title, keeping you updated by phone, text or email.

Documents to have ready

  • Two most recent pay stubs
  • W-2s for the last two years (or two years of tax returns if self-employed)
  • Two to three months of bank and investment statements
  • Photo ID and Social Security number
  • Gift letter if family is helping with the down payment
  • Signed purchase contract once you are in escrow

Every file is different. Your loan officer will send an exact list.

Conventional Loan FAQs

Have a question that is not answered here? Ask a loan officer.

What credit score do I need for a conventional loan?

Requirements depend on the program and your full financial picture, and stronger credit usually means better pricing. A loan officer can review your situation one-on-one.

Can I use a conventional loan for a rental property?

Yes. Investment properties typically require a larger down payment, often 15% to 25%, and additional reserves.

Is a conventional loan the same as a conforming loan?

Most conventional loans are conforming, meaning they meet Fannie Mae or Freddie Mac guidelines and fall under the annual loan limit. Loans above the limit are called jumbo or non-conforming, and many jumbo loans are also conventional loans.

When does PMI go away?

PMI may be removable once you build enough equity and meet the requirements, such as a good payment history. Your loan officer will walk you through the options for your loan.

Can I buy a condo with a conventional loan?

Yes. The condo project may need to meet Fannie Mae or Freddie Mac guidelines, such as owner-occupancy levels and HOA budget health. We check this early so there are no surprises.

How long do I need to be at my job?

Lenders generally want a two-year work history, but it does not need to be with the same employer. Recent graduates and people changing jobs in the same field can often qualify.

Can I use gift money?

Yes, on a primary residence or second home, as long as the donor signs a gift letter and the transfer is documented.

Talk to a loan officer

Talk with us about a Conventional Loan

Tell us a little about your plans. A licensed loan officer will call you, usually the same business day.

  • No cost and no obligation
  • We can fill out the application for you
  • Evening and weekend calls available

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Related programs

FHA Loan I want a low down payment and flexible credit Government-insured with 3.5% down and more forgiving credit guidelines. Learn more Jumbo Loan I want to finance a higher-priced home Financing above conforming limits for luxury and high-cost markets. Learn more First-Time Home Buyer I want help buying my first home Guidance, low down payment programs and a loan officer who fills out the application with you. Learn more