Conventional loan
The go-to home loan for buyers with solid credit — flexible, widely available, and no government red tape.
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Everything you need to know about the Conventional loan in under 3 minutes
What is the Conventional loan?
What are the benefits?
- As little as 3% down for qualified buyers
- PMI cancels at 20% equity — and automatically ends at 22% (unlike FHA, which often lasts the life of the loan)
- Competitive rates for borrowers with good credit
- Eligible for primary homes, vacation homes, condos, and investment properties
- Available as a fixed or adjustable rate in a range of term lengths
What are the requirements?
- Minimum credit score of 620 (higher scores unlock better rates)
- Debt-to-income (DTI) ratio generally at or below 45%; some lenders allow up to 50% with strong compensating factors
- Loan amount within 2026 conforming limits: $832,750 for most single-family homes, up to $1,249,125 in high-cost areas
- Stable, verifiable income and employment history (typically 2 years)
- Down payment as low as 3% for primary residences; 20% avoids PMI
- Self-employed borrowers generally need 2 years of personal and business tax returns
- Property must be appraised to confirm fair market value
- Cash reserves may be required depending on credit profile, DTI, and property type
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Frequently Asked Questions
- What's the difference between a conventional loan and a conforming loan?
“Conventional” means the loan isn’t government-insured. “Conforming” means the loan also stays within Fannie Mae and Freddie Mac’s loan limits and guidelines. Most conventional loans are conforming, but some — like jumbo loans — are conventional but non-conforming because they exceed the county loan limit.
- Do I have to put 20% down to get a conventional loan?
No. Conventional loans allow down payments as low as 3% for qualified buyers. You’ll pay private mortgage insurance (PMI) if you put down less than 20%, but PMI can be cancelled once you reach 20% equity in your home — unlike FHA mortgage insurance, which often lasts the life of the loan.
- How do I get rid of PMI?
You can request PMI cancellation in writing once your loan balance drops to 80% of the original purchase price, provided your payments are current. Your lender is required by law to cancel it automatically when your balance reaches 78%. If your home’s value has risen significantly, a new appraisal may let you cancel sooner.
- What is the maximum loan amount for a conventional loan in 2026?
For most single-family homes in the continental U.S., the 2026 conforming loan limit is $832,750 — up from $806,500 in 2025. In designated high-cost areas, the limit rises to $1,249,125. Loans above these thresholds are classified as jumbo loans and follow different rules.
- Is a conventional loan harder to get than an FHA loan?
Generally, yes. Conventional loans typically require a higher credit score and a stricter debt-to-income ratio than FHA loans. However, they come with lower long-term costs for borrowers with good credit — particularly because PMI can be removed, whereas FHA mortgage insurance often can’t be cancelled without refinancing.
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